Next week the Full Council agrees the 209 page Budget statement for 2019/20. This is a weighty document for the busy reader. Below is a quick guide through the main highlights.
What’s happening in the current year 2018/19
The original budget was set at £217.8m – it was subsequently increased by £4.7m, resulting in a revised number of £222.5m. In the Cabinet report of 13 February 2019 the Council highlighted that there was a risk that this would be overspent by £5.7m, principally due to pressures from Children’s services. Alternatives are being reviewed to minimise this projected overspend.
The Council planned to spend £134.3m on Capital projects – roads/building/major maintenance schemes. This is projected to underspend by £46.4m. This results from general slippage across many programmes – noteworthy are the new Swimming Pool, Flood Defences and the £25m contribution to the Sinfin Incinerator.
The Council is legally obliged to set a balanced budget for the coming year ( 2019/20) which it has done. There are forecast gaps of ~ £5-£7m in future years. The Government is yet to confirm the future funding formula although it is known that the Revenue Support Grant will phase out in 2020/21 – it will be replaced by a larger portion of Business rates (the Council currently retains 50% and this will increase to 75%.)
The total budget planned for 2019/20 is £228.1m which will be funded by:
- Council Tax £97.9m (2.99% increase)
- Business rates £57.9m
- Better Care Fund (Health) £21.9m
- Public Health Grant £18.7m
- Revenue Support Grant £12.5m
- Other Grants £11.7m
- Transfer from reserves £7.5m
The total funding (exc reserve tfrs) is £2.8m higher than 2018/19. – a 1.3% increase.
The 2019/20 is subject a number of external pressures relative to 2018/19, the main ones being:
- Unachievable staff saving from 2018/19 – £1.7m
- Inflationary costs of Commissioned Care – £1.3m
- Adult Social Care pressures – £1.5m
- Costs relating to “Looked After” Children – £4m
- Garden waste collection service – £0.8m
These will be partially offset by savings, the main ones being:
- Savings on Microsoft products / other IT licences – £0.5m
- Reduction in Livewell provision – £0.4m
- Reduction in Public Health Offer – £0.5m
- Final closure of in-house Day centres – £0.6m
- Review of Adult Care packages – £0.4m
- Re-focus Carers service – £0.2m
- Reconfiguration of Children’s Homes – £0.2m
- Rationalising Council care homes for elderly – £0.6m
- Parking charges – £0.4m
The Capital Budget is £156.6m, the major projects being:
- New Swimming Pool – £7.5m
- A52 – £16.2m
- Sinfin Incinerator £25m
- Project Mulberry – £8.5m
- Assembly Rooms – £13.8m
- Office Space – Bold Lane – £6.4m
- Flood Defences £14.1m
- New Houses – £6m
The funding is split : £51.5m External ( Govt grants and supported sources) ; £105.1m Internal ( Borrowing, revenue funding and capital receipts)
The 2 main budget reserves, which have grown over the last few years are:
- Unallocated General Fund Balance – £10.9m – this is retained at this level for the foreseeable future
- Budget Risk Reserve – At the beginning of 2018/19 this was £35.9m; it will fall by £12.5m by 31 March 2019 in large part due budget smoothing and the support for the A52. The unravelling of the full extent of the A52 overspend will result in it dropping to £3.8m in future years – a 90% reduction!
Council Officers and Councillors will always say that the next year will be a tough year – it’s supposed to be! Very few organisations live in an environment where they can spend freely and with little care – especially in the private commercial sector. Local Authorities have always had a reputation for poor financial control and unnecessary spending.
Derby City Council’s budget in 2010/11 was £214.8m – it has risen by 3% over 9 years to this years budget of £228.1m. Many Council insiders will accept that, in 2010, the Council was carrying a lot of “slack”, and there was not the right level of discipline over cost management. Over the last 5 years, there has been clear evidence that cutting of some services was politically motivated. The budget pressures were not as severe as publicised. Unallocated/budget risk reserves grew from £12m to £55m (2010 to 2018). Arguably this was prudent financial management – even “local austerity”, perhaps? That growth would not have been possible had the funding been insufficient. Most of this reserve will now be consumed by the A52 overspend!
The increase in the costs of Adult Social care is a demographic inevitability. The Council’s strategy, which is the more modern approach, is to ensure that people are as independent as possible. This does not have to be more expensive; it requires creativity, and a thriving, and integrated, voluntary sector / private provision coupled with further development of community support. The Council’s structure does not lend itself, easily, to increasing spending in one area ( e.g. support for voluntary sector) in the expectation of savings elsewhere – and certainly not where the benefit is external to the local authority – e.g. NHS.
The number of children requiring Council Support ( e.g. Special Educational Needs (SEN), “looked after”, fostering etc) seems to be on the increase. The evidence suggests that this is not driven by population growth.
The Council does nothing quickly; yet it needs to adapt, with pace, to recognise the demographic shift. A number of the savings in this year’s budget were planned for implementation a few years ago, and they are only just materialising. Many of the headline cost reductions never did save money – they were mainly covered up by millions of pounds in Corporate Treasury management savings.
The Council can’t continue to make any meaningful difference to its efficiency and effectiveness by shaving a few pounds here and there. It needs to re-ignite its position as a local point of integration and leverage the community more in promoting a more seamless link with the different sectors. Through this style of transformation it might just find that this great City has a huge body of willing colleagues who could help…if only they were allowed to do so!