23 Nov 2010

Cuts impact on Stroud District Council

At the last Full Council meeting (see here and here) we were due a presentation from the Chief Executive to the Council on how the cuts would impact. However due to the late hour of the meeting the item was cut from the agenda and instead a briefing paper was circulated to councillors.

As this was going to be part of a public meeting I see no reason why I should not publish the paper's notes below with the Chief Exec's comments. They give some indication of the impacts locally.

Photo: Randwick woods

The Government’ Comprehensive Spending Review (CSR) and what it means for the Council

My presentation set out the main headlines of the CSR around the Council’s priorities.


My headlines;

• 28% cut in grant over four years
• Offer of 2.5% grant for council tax freeze in 2011/12
• 1% increase in Public Works Loan Board rates
• Government capital spending halved
• New Homes Bonus – £ for £ match additional council tax over 6 years
• Councils can keep new business rates
• Tax increment financing – borrowing against projected growth in new business rates
My commentary;

We will know the true grant position in early December – 28% is the headline. The Government may vary its grant for different types of authority and it is collapsing around 90 funding streams into about 10 as part of the grant settlement. The Government is planning on changing the balance between local generated funding and centrally determined grant.

A 28% reduction over four years on our £7M grant is about £2.1M. The Government is ‘front loading’ the cut. Nationally, £2.2BN out of the £5.5BN cut in local government funding will come in the first year 2011/12.

Overall, the Government is signalling a shift in the balance between central and locally generated funding. The New Homes Bonus, Tax Increment Financing, new business rates, and the Self Financing for Council Housing are all part of this shift. The overall amount of local government spending will fall over the four year period (2011-15) of the CSR.

The Government is offering a grant equivalent to a 2.5% increase in council tax for those authorities that ‘freeze’ it in 2011/12. In the subsequent three years, the Government has calculated a council tax increase of 12% i.e. a ‘smoothed’ annual increase of 4%.

Affordable Housing

My headlines;

• Housing Benefit caps reduced
– 10% cut in HB if on jobseekers allowance for more than a year
– Age threshold up from 25 to 35 for shared room rate
– Reduced rates
• 10% cut in council tax benefit then local determination
• Social housing budget cut - £8.4bn to £4.5bn
• New rents to be 80% of local housing allowance
• Self financing for council housing
• Rental income from new rents to invest in new homes
• 150,000 homes by 2015
• Linked to planning policy changes
My commentary;

The Government’s intentions have been well publicised. The whole housing benefit regime will change as a result of the Government’s proposals for a universal benefit (much of this has been made known since the Council meeting). The Council is awaiting the Government’s decision about ‘self financing’ for council housing. The Government has committed itself to the reform initiated by the previous Government.

Since the Council meeting, the Government has announced further changes to the length of tenure for new social housing tenants.

Climate Change

My headlines;

• Reduced feed in tariffs for renewable energy
• Warm Front phased out
• £1bn Green Investment Bank – to be supplemented by asset sales
• Green Deal for households – roll out of Stroud pilot
• Renewable Energy Bonus
My commentary;

The feed in tariff will be lower than that planned by the previous Government. The Green Deal is based on the PAYS scheme piloted in Stroud District by the previous Government. The Green Investment Bank will fund new initiatives that help the UK reduce its carbon footprint. The Renewable Energy Bonus will be available to councils where new business growth takes place and uses renewable energy.

Since the Council meeting, the Government has made announcements about investment in the green economy.


My headlines;

• 50% cut in capital spending on infrastructure
• £1.4bn Regional Growth Fund focused on 24 Local Enterprise Partnership areas
• 75,000 adult apprenticeships per annum by 2014
My commentary;

The Regional Growth Fund is primarily directed to the recently approved Local Enterprise Partnerships – Gloucestershire’s bid to become one alongside Wiltshire and Swindon has not been approved by Government and further discussions are taking place. Much of the Regional Growth Fund is directed at regions where the public sector is a large part of the economy – in the North East it is about 60% of the region’s employment.

Bids for such funding have to be private sector led. Further details have been published since the Council meeting and Lord Heseltine will head the panel that will make recommendations about the allocation of the Fund.

More detail to come…..

• White Papers
– Public Health, Local Growth, Planning
• Bills
– Health, Police, Police Reform, Localism
• Guidelines
– £500 payments, Council Tax Referendum

My commentary;

Since the Council meeting, more details have emerged on many of these. The Government has published Departmental Business Plans which a timetable for these and other matters. The Localism Bill is expected to be introduced into Parliament this week.

………and looking at the impact all this has on local government, the following has been reported in the local government press;

(all the following are over four years unless shown)

• Cornwall - £110m, 1 in 9 jobs
• Doncaster - £80m, 1 in 6 jobs
• Lincolnshire - 1000 jobs (14% cut)
• Kent - 1,500 jobs (9% cut)
• Birmingham - £230m, 26,000 non-teaching jobs with Section 188 notice
• Newcastle upon Tyne - £110m, 2000 jobs
and more locally…..

• Wiltshire - 350 Police jobs
• Bristol - £50m over 3 years
• Gloucestershire - £108m, 1 in 6 non-teaching jobs
• Gloucester City - £6.5m, 5% pay cut proposed
• Somerset – 1,500 jobs
• Tewkesbury £1.4m in 2011/12
• Cheltenham £4.8m with £2.4m of this in 2011/12

My commentary;

Many of these cuts are front loaded. Newcastle is working on £50M of its £110M in the first of the four years

……..and for us

Impact on Medium Term Financial Plan

• 28% cut is £2.1M off our government grant of £7M
• Final figure in December – may not be 28% for all types of councils
• Other income down and council tax frozen in 2011/12
• Gap between spending and income is £2.7M by 2015
• Concessionary fares – unknown impact

My commentary;

The Medium Term Financial Plan (our 4 year plan) presented to Cabinet on the 30th September had assumed a Government cut of this order. The final settlement will not be known until early December. We also have uncertainty about the amount of money that the Government will take off when concessionary fares transfer to the county council. We spend around £750,000 on them but the initial figures produced by civil servants suggest somewhere between £1.1M and £1.4M could be taken out of our grant. We are making the strongest representations and the Local Government Association considers the situation facing local government ‘a mess’.

The Council has been looking at next year’s budget cuts and efficiency savings for a considerable time. At the moment, it looks as if the work we have been doing could produce £2.7M over the next four years. This will be considered by Cabinet on the 6th January and then Scrutiny and Council. The final position on concessionary fares will be critical to all this.

We have the following things in place to help us to continue to manage the situation. We are also working with other public services across Gloucestershire on getting better value for money. Gloucestershire’s public spending is around £3.3BN each year and there are opportunities for better procurement and service delivery by looking at things from the customer point of view not organisations. Our systems thinking is being used in a pilot for older peoples services that will produce better services and cut out waste across public agencies.

• Workforce Plan delivering 10% reduction in staff by 2014 – 45 FTE
• Budget savings package for 2011/12 - £2.7m over 4 years
• ‘More for less’ but we can only go so far
• Continue successful approach
– ‘One Council’ teamwork
– Systems thinking
– Staff suggestions
– Accommodation
• ‘Community Budgets’ for public services

Overall, the Comprehensive Spending Review is tough but there are no surprises. It will be challenging but because we have been working on this for some time with our 4 year budget plan and our workforce plan, we have things in place that will help us cope with the CSR impact.

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