The Mayor in his opening remarks indicated that although it was important that the Council considered the process for the medium to long term financial plan, the reasons for which the Mayor outlined at the meeting, the Council must first deal with the budget for 2015/2016, which the Mayor then outlined in some detail.
The Mayor indicated that on the basis of the current assessment of government spending plans, it was expected that Council spending would need to be cut for the next financial year by £14.1m. He added that in addition to having to address reduced funding, rising demands placed on our services would also have to be dealt with. This would include, for example, the need to increase support for vulnerable people including children looked after and dealing with the growing needs of an ageing population. The Mayor indicated that he had spoken about this subject in some detail over the past 12 months and had stated that 53% of the budget at present was spent on looking after children and the elderly. Due to the financial cuts being imposed on this Council, at present and over the coming years, together with the obvious rise in demand of children and adult services, it was likely that by 2020 approximately 73% of the budget would be spent on those particular services. He added that adult social health care, due to an ageing population and the rise in older people suffering from dementia, would be a particular challenge. He added that this was the main reason why in his view the Council Tax base must rise by building more houses and thereby attracting more population, so that the Council received higher Council Tax revenues and greater Formula Grant from Central Government. The Mayor stated that he would deal with the Council Tax issue later in his statement.
Whilst the implications of the most recent government announcements were still being analysed, the Mayor indicated that he was confident that the size of the cuts that had to be made for 2015/2016 would not increase beyond £14.1m, due to:
a) Proposed mitigating actions
b) Proposed financial cuts
c) Proposed increased Council charges
The Mayor then outlined a series of proposed mitigating actions that would minimise the impact on budget cuts in relation to services and jobs over the coming year and allow for a more transformational approach in dealing with the budget in the medium and long term. He therefore proposed the following mitigation actions, which amounted to £4.3m:
1. Reduce the general fund balance, which was best described as our bank balance from £6.0 to £5.2m, producing a one-off benefit of £0.8m.
2. Remove financial provision that had been made for certain projects and risks that were no longer required, producing a one-off saving of £937,000.
3. Introduce new accounting practices that would improve cashflow and therefore save approximately £250,000 per annum.
4. Remove core Council funding for services costing £1m per annum to deliver and utilise other funding sources available to the Council.
5. Remove core Council funding for educational initiatives funded through Section 17 payments and as an alternative utilise unspent Community Support Fund monies, which will save £140,000.
6. Utilisation of 2013/2014 budget underspend, which amounted to £1.2m.
The Mayor stated that the remaining £9.8m gap required the Council to continue to restructure and refocus services across the Council to reduce costs and make financial cuts, so that a balanced budget could be achieved in the financial year 2015/2016.
The Mayor then outlined his proposed financial cuts increased charges which he went through line by line, outlining the saving each would deliver in 2015/2016, so that Members were fully aware of the nature and extent of each proposal, which were as follows:
1. Reduce the cost of administrative support by a further £2,155,000 by progressing a programme of automating manual processes through further Information Technology investment and rationalising the number of separate resource teams that currently exist. This will result in approximately 50 job losses.
2. Reduce the cost of the Human Resource advice function by reducing support to managers, who will be more empowered and autonomous, which will save £110,000. This will result in approximately 6 job losses.
3. Reduce the cost of our approach to performance management and policy formulation, which includes the automation of manual processes through further Information Technology investment, which will reduce the number of separate resource teams that currently exist. This will result in a saving of £750,000 in 2015/2016 and approximately 40 job losses.
4. Reconfigure Information Technology support services, which involves supporting fewer technical systems producing a more cost effective contract. This will result in a saving of £650,000 in 2015/2016 and a further £350,000 in 2016/2017, with approximately 30 job losses.
5. Transfer the maintenance function of Stewart Park to Askham Bryan College, which will save £180,000. This proposal will also result in Askham Bryan investing in the park to create an equestrian parade ring.
6. The reduction of one management post within Environment by merging management responsibility within services, which will save £40,000.
7. Transfer management responsibility for the Councils sports and leisure centres to an external trust, saving £430,000 in 2015/2016 and up to £1.66m over a full year period. This will result in approximately 25 job losses. (A full Member briefing in relation to this topic will be organised in the near future).
8. Introduce energy and efficiency initiatives within Council buildings, which will save £30,000.
9. Reconfiguration of our lease interests in Aurora Court at Riverside Park, which will save £125,000.
10. Further reduce the cost of finance and accountancy support through the implementation of a programme of automating manual processes through further Information Technology investment and empowering managers to be more self sufficient. This will save £296,000 in 2015/2016 and a further £296,000 in 2016/1017 with approximately 16 job losses.
11. Reduce the amount of corporate funding available for community and other public events by 80%, which will save £195,000.
12. Re-negotiate arrangements for Trade Union consultation and engagement that ensures more efficient use of the shop steward network, which will save £20,000.
13. Centralise departmental budgets for the purchase of computer equipment and reduce Information Technology working costs, which will save £70,000.
14. Reduce costs for undertaking occupational health assessments of staff to reflect the lower utilisation of the service, due to our staff base declining, which will save £50,000.
15. Reduce Council engagement with legal Barrister Chambers for advice with regard to children safeguarding casework and introduce alternative legal arrangements, which will save £160,000.
16. Reduce costs with regard to the Sheltered Housing Scheme Warden Services by re-negotiating service costs, which will save £125,000.
17. Reconfigure the Re-ablement Service, so it concentrates solely on complex, high-risk discharge from hospital and intermediate care, which will save £27,000 with approximately one job loss.
18. Reconfigure the Families First team, which will save £25,000 and result in one job loss.
19.Terminate particular contracts with the private sector for the provision of childrens residential care and for the Council to assume the responsibility and control, which will save £200,000.
20. Reconfigure the processes for delivery of strategic highways and highways maintenance, saving £390,000. This will result in 15 job losses.
21. Reduce costs in relation to exhibition and subsidised events, as well as the number of staff within the Cultural Services department, which will save £60,000, which will result in one job loss.
22. Reduce the financial contribution to mima by £410,000, which is in-line with the partnership and transfer of the mima art gallery to Teesside University.
23. Reduce the amount spent on services such as events in libraries, outdoor youth activities and local community events, saving £150,000.
24. Remove Council subsidies for bus services, 12, 28,29A, 537, 603, 605, 606 and 607, which will save £36,000.
25. Reduce the Councils contribution to the operating costs of Tees Valley Unlimited, which will save £18,000.
26. Reduce senior management posts across the Economic Development and Communities directorate, which will save £250,000. This will result in 5 job losses.
27. Reduce radio and other technical equipment purchases within the Street Warden service, which will save £30,000.
28. Reduce the purchase of books for libraries by 50%, which will save £100,000.
29. Integrate Libraries, Community Regeneration and incorporate 0-19 staff into one Early Help team, which will save £812,000. This will result in 33 job losses.
30. Reconfigure the operating practices of Environmental Health and Trading Standards, which will save £100,000. This will result in one job loss.
31. Merge Adults and Childrens safeguarding review services, which will save £200,000. This will result in 4 job losses.
32. Reconfigure the Childrens Safeguarding delivery model to reflect changes in legislation affecting the role, functions and responsibilities of managers, which will save £200,000. This will result in 4 job losses.
33. Improve the efficiency within the Crematorium Service by streamlining processes and reducing management costs, which will save £150,000. This will result in one job loss.
34. Reconfigure the function delivery of Youth Offending Services by terminating particular contracts with outside agencies and providing the services in-house, which will save £230,000.
35. Reduce the cost of supplies and services across Adult and Childrens Services by 10%, which will save £240,000.
36. Reduce management costs within the Planning Service, which will save £40,000. This will result in one job loss.
37. Merge management roles within the Business Support function of Adult Social Care, which will save £200,000. This will result in 4 job losses.
38. Review the operation and charging rates at the Tees Community Equipment and School Catering Services and Ayresome Industries, which will increase income by £100,000.
39. Remove core Council funding for Telecare brokerage services and utilise health funding as an alternative, which will save £33,000.
40. Increase charges to external organisations for their use of the Gleneagles disability service, which will increase income by £50,000.
41. Remove Council funding in respect of communication support for children with complex needs to the DfE High Needs Budget, as permitted in School Funding. This will save £30,000.
42. Charge the Health Service for the provision of primary mental health workers for Child and Adolescent Mental Health, which will increase income by £50,000.
43. Charging for Newport Road bus lane misuse, which will generate income of £30,000.
44. Charge South Tees Youth Offending Partnership the true cost of support services in relation to Middlesbrough assuming lead authority responsibility for the delivery of Youth Justice, saving £100,000.
45. Increase charges for the provision of careers information advice and guidance contracts with schools and colleges, which will generate income of £95,000.
The Mayor indicated that the 51 proposals he had gone through which included mitigating actions, financial cuts and Council charges added up to a total of £14.1m in savings. The impact on staff of these proposals was significant, amounting to approximately 220 job losses over the coming financial year. In addition, the proposals would see at least 350 staff TUPE transfer back to the Council from Mouchel Business Services and somewhere in the region of 200 staff TUPE transfer to external organisations from the Council. He was hopeful that we would continue our success in achieving the vast majority of job losses through early retirement/voluntary redundancy process, as well as natural retirement, with others leaving to take up employment with other organisations. He outlined his intention that the number of compulsory redundancies would be kept to a minimum. He was not in a position to give this Council any further details, but he would make a statement on this very important subject, as and when further information became available.
The Mayor went on to indicate that bearing in mind the uncertainty of the assumptions being made by the government in relation to a whole host of financial issues, such as inflation, economic growth, deficit and public borrowing forecasts, it was appropriate for this Council to be cautious in its budget assumptions, which would have a direct impact on budget proposals for 2015/2016 and beyond. Whether or not a change of Government in May 2015 would result in a change of direction in the fiscal arrangements was a matter for debate, but the deficit and public borrowing would have to addressed in any event by whomever is the government of the day.
The 51 proposals that the Mayor had outlined would now be subject to a six-week consultation exercise, which would run until 3rd December 2014. Consequently, at a further Special meeting of this Council on 10th December 2014, he would outline:
The feedback received from the consultation exercise on his proposals announced at Council and any changes he decided to make and;
New proposals or otherwise to address any gap, as a result of the changes to his proposals.
The Mayor reminded members that he had spoken in the Chamber on a number of occasions with regard to the financial pressures the Council faced and in particular the year on year increase in the number of children and vulnerable adults requiring social care support. The costs of demand for 2015/2016 were estimated at £5.3m and those had been budgeted for in full. Mitigating actions and savings proposals in those areas totalled £3,025,000 resulting in a net increase of £2,275,000. Members would be aware that 53% of the overall budget was spent within the social care setting and due to the financial cuts being imposed upon this Council by the Coalition Government, together with the rising demand in social health care, it was believed that by 2020, 73% of the budget would account for this particular Council service. The Mayor could not emphasise enough the importance of raising the Council Tax base and population so that we received more Formula Grant from Government, as a failure to do so would result in serious consequences indeed by 2020.
As in the last 3 years, the government had indicated that any Council Tax increase in excess of 2% should be subject to a referendum. This was a costly process, which brought a high level of uncertainty to residents and the Council.
The Mayor believed that we should not set a Council Tax increase in excess of 2% and consequently there would be no requirement for a referendum.
As Members would be aware, a further Council Tax Freeze Grant was again to be made available, provided that the Council Tax increase was no higher than 1%. This was guaranteed for a two year period.
If the Freeze Grant was accepted, the Mayor did not believe that this would be sustainable and would give him little or no room for manoeuvre in responding to the consultation process, in the event that modifications needed to be made.
In addition, a short term gain of accepting the grant, would be considerably exceeded by the significant medium to long term impact on the budget. Had the Council accepted the Freeze Grant over the last 3 years, approximately £1.4m additional savings would be required for 2015/2016. He therefore highlighted the impact the Freeze Grant could have on a Council year on year. In addition, he estimated that taking the grant for the coming financial year would result in the Council being required to find an additional £18m of reductions over the next 10 years.
Bearing in mind the challenges faced as a town and Council with regard to a whole host of issues, but in particular the financial bill for the rising demand in social health care between now and 2020, he felt that the Council Tax base must be raised and not reduced. Failure to do so will result in dire consequences for the residents of this town.
In looking at next years Council Tax, he had taken into account a number of factors including the current level of Council Tax, the current levels of inflation, the pressures of caring for our vulnerable people, the level of budget reductions required and the medium to long term implications of a number of statements made by the Chancellor of the Exchequer.
If the Freeze Grant was to be accepted another £400,000 of budget reductions would have to be found next year, as well as subsequent years. He did not believe this was in the interests of the town as a whole and would create even greater pressure on the Councils finances.
In considering all of the factors, the Mayor believed that the Freeze Grant should not be accepted and the Council Tax should increase close to 2%.
However, he did believe that this issue should be debated by Council at the Special Council meeting on 10th December 2014, so that all Councillors had the opportunity to articulate their opinions on this important subject.
In response to Members questions, the Mayor provided further clarification in respect of a number of issues that were raised by Members at the meeting. Some of those issues included: the proposed job losses; the proposed rise in Council Tax; the Freeze Grant; supporting vulnerable people; safeguarding; and collection of Council Tax. Arising from questions raised by Councillor Dryden, the Mayor indicated that he would provide him with a written response within 48 hours, copies of which would be circulated to Members.
ORDERED that the proposals outlined above be noted.