Derby City Council

The £12m gap in next year’s Council budget is more concerning than the A52 overspend. The financial planning system is “out of control”.

At the Cabinet Meeting next week the new Conservative administration will present its proposed Medium Term Financial Strategy for 2019/2020 to 2022/2023. The plan reveals a significant gap between expected spend and funding available amounting to £23m.

Lisa Eldret, the Leader of the Labour Group is reported as saying  “The gap they’re talking about, we’d been predicting that. None of this was a secret, none of this can be a surprise.”

Eldret is correct in her statement that in the most recent budget the previous Labour Council did report a £18.5m shortfall…..but she ignores the timing of the shortfall, and this is where the Labour Council got it seriously wrong!

Background

At the January 2018 Council meeting, the following position was presented for agreement.

In summary this states that:

  1. For 2018/19 and 2019/20 – taking into account all known pressures ( including inflation) on the budget, together with planned savings, there was no shortfall in funding. A “balanced budget”.
  2. For 2020/21 and 2021/2022 – a shortfall is identified totalling £18.457m  (£7.224m + £11.233m). This is the gap that Eldret refers to.

The Conservative administration proposed MTFP shows the shortfall appearing in 2019/2020 of £12.2m, which is up to 2 years earlier than in the latest budget document (above) approved by the last Labour Council.

Comment

It always struck me as odd that the previous administration could set a “balanced budget” with no draw on reserves for the next 2 years. This seemed totally inconsistent with the rhetoric that the Council was under-funded, and that there were significant pressures on Adult Social Care and Children’s Services. In effect it was stating that the Council could deliver the level of service that it wished to provide within the confines of the funding available. So everything was ok?

It also stated that by the end of 2019/2020 all savings would have been exhausted leaving a budget gap.

This July 2018 report states that, due to known service pressures in social care/pay awards, there will be a gap next year of £12.199m. Why was this not recognised in January 2018, just 6 months ago? Why would the Labour Council not wish to highlight that there was a funding shortfall?

The Conservative Councillors. who now lead the Council, have not arrived at this assessment themselves. They set priorities but would not generate the cost data – this is from the paid Officers in the Council. The same people who would have prepared the plan in January 2018 that indicated that there was no problem. Were they hiding data from the Councillors, or were they told to suppress “bad news”?

The latest proposal starts with 2019/2020. These additional pressures would equally apply to 2018/19 which suggests that there may be a significant shortfall in this current year. The report is silent on this issue.

Any plan is based on a lot of assumptions. Social Care, is largely demand led, and the required budget could vary quite significantly depending on those assumptions made. Has the current administration been more cautious in its assumptions thus increasing the planned cost? Could this be politically driven to undermine the credibility of the previous administration?

What has not been explained is, why the plan presented in January 2018 to the Full Council, was so wrong?

In May 2018 we found out that the A52 project was out of control with a potential overspend of £15m. Now, next years budget is in error by £12m, together with an, as yet, undeclared “black hole” in 2018/19.

The Conservative administration need to honour their commitment to be transparent in these matters so that the Council Tax player can get clear answers to these questions.

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