Councils continue to suffer from the Labour legacy

Copied from Local Government Chronicle online
Next five years to see higher-than-expected cuts
10 December, 2014 | By Kaye Wiggins

Council spending is set to be over 4% lower than previously projected in both 2016-17 and the following two years, it has emerged, after George Osborne heralded “colossal” spending cuts.

Forecasts published by the Office for Budget Responsibility in the wake of the autumn statement last week showed “net current expenditure” by English local authorities would be £106.9bn in 2016-17, down from the £111.9bn forecast by the watchdog in March.

The OBR’s latest forecast for 2017-18 spending is £106.9, down from £111.6bn in its March forecast. In 2018-19 the OBR predicts spending will fall by £4.9bn more than it forecast in March.

The revised forecasts, which have emerged as councils await the publication of the provisional local government finance settlement for 2015-16, were due in large part to a steeper-than-assumed fall in central government grants to councils.

This came after the publication of the autumn statement revealed plans to accelerate public spending cuts in a bid to balance the budget by 2018-19 and generate a surplus by 2019-20.

The OBR’s gloomy forecasts also showed local authority current spending, excluding education, public health and housing benefit, would fall from 4% of nominal GDP in 2009-10 to 2.5% by 2019-20. In 2014-15 the figure is 2.9%.

In a speech on the day of the autumn statement, OBR chair Robert Chote said there was “no robust basis” on which to assume that cuts in overall public spending were “undeliverable”.

Mr Chote noted that councils were “in aggregate still adding to their financial reserves rather than running them down.”

The OBR’s figures showed non-schools reserves would rise from 10.7% of councils’ net current expenditure in 2009-10 to 24% in 2019-20. The watchdog has assumed councils will add to their current reserves by £1.5bn in 2014-15 and will continue to add to their reserves, but by decreasing amounts, until 2018-19.

The OBR reached its figures using Treasury policy assumptions for total spending after 2015-16, assuming grants to local government remained the same as a proportion of overall spending as they were due to be in 2015-16.

The figures emerged as Paul Johnson, director of the Institute of Fiscal Studies, said public spending cuts would be made on a “colossal scale” over the next five years. This could cause the “role and shape of the state” to change “beyond recognition”, he said.

Jon Rowney, London Councils’ strategic lead for finance, procurement and performance, told LGC: “Our early analysis suggests the pace of the cuts could be steeper and faster than previously thought.” The body had previously estimated London boroughs would see a 60% reduction in core funding from central government between 2010-11 and 2018-19.

Local government minister Kris Hopkins said: “What these figures actually show is a big increase in council reserves. Local authorities should of course maintain a healthy cushion when balancing the books but such substantial reserves are completely unnecessary and should be tapped into to protect frontline services and keep council tax down.

“Councils should be making creative use of reserves to address short-term costs, such as restructuring or investing now to realise savings in the longer-term.”

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Local government – something we used to have in the UK?

I am sure we would all agree with Cllr Sir Merrick Cockell, LGA Chairman, when he said last week:

“While this Budget has not brought further cuts for local government, it has not changed the fact that the next two years will be the toughest yet for people who use and rely upon the services which councils provide. The black hole in funding for local bus services, a £10.5 billion backlog in road repairs and continuing uncertainty over funding for much-needed reforms of the adult social care system have yet to be properly addressed.”

By next year, central government funding for councils will have been cut by 40 per cent during this Parliament.
If we are to avoid an upturn in the economy coinciding with a decline in public services, we need nothing less than a fundamental reform of the way the public sector works and an honest reappraisal of how public services are provided and paid for in post-austerity Britain.
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Add to all of this, the recent announcement that the government is looking at centralising children services in England, combined with the push for academy schools, both services currently delivered by county councils, and you could be forgiven for thinking that there’s a hidden ‘European’ agenda in play here.
The last labour government made an abortive attempt to up the game of parish councils, encouraging them to takeover the delivery of services that were being carried by district councils. As well as leading to the demise of two tier government in shire areas, the idea seemed to be about refocusing local people on to the parochial (very local) and away from greater than local issues, thereby strengthening the position of the then emerging regional government bodies.
The current government seems to be hell bent on a similar goal of undermining, or even eliminating local government at the district level and possibly county level, but without anything being put in place between the very local (parish) and national levels.
One can only suggest that the way things are done in many European countries, with village and town councils run by some form of mayor and looking after the basics, a regional government body at the next level and everything else controlled by the national government, is what all our MPs want, no matter what party they represent.

Good charities are also good businesses – some are better than others

I’m reposting this, following today’s front page story in the Telegraph. Although they are targeting the £100k+ salaries that some charity bosses now apparently receive, they are also suggesting that this could be a sign of the salary creep that is allegedly happening in the public sector.

It should hardly come as a surprise, that if you push the often complex and challenging community support work done by local authorities on to the voluntary sector, their executives are going to expect to be rewarded for managing that increased workload. As I say below, good charities are also good businesses and good businesses know that high quality management doesn’t come on the cheap.

It’s tempting to see this as some sort of three card trick by government, where they encourage charities to take over more and more local authority work, thereby easing the burden on the public purse. In the meantime, these charities are working their socks off to find the extra funding needed to supplement the often inadequate funding that has been passed on by the already inadequately funded local authorities. The confidence tricks comes when you realise that much of the extra money required comes from the same public that has already paid their taxes to government to provide those services!

Personally, unlike some, I’ve never laboured under the illusion that all those who work for charities, do it out of the goodness of their hearts – even where that charity has no national profile.

When it comes to the national charities and their modus operandi, they are, first and foremost businesses, with a business plans, financial projections and performance targets. As such, when they need to recruit somebody into one of their senior management positions, the last thing on their minds is likely to be the social conscience of the individuals applying for the vacant position.

Indeed, having somebody who is more concerned about doing ‘the right thing’ at every step of the way, even if it costs the organisation money, is more likely to find themselves receiving a thank you very much for applying letter, than one offering congratulations.

So, I suppose it shouldn’t be too much of a surprise to see that some of the most popular charities are paying big bucks to their top staff.

That said, it stills seem slightly wrong to see £60,000 plus salaries, potentially being paid out of the pennies and pounds donated via high street collections and charity shop donations, sometimes by those who can least afford it.

To be absolutely fair, at least to those charities that deserve it, the key number for me, is the % of their total income spent of their raison d’être, charity. Those that achieve 70% and above should be acknowledged for achieving figures similar to the overheads costs seen in most successful and efficient businesses.

Those returning figures below 70% and especially below 50%, should be questioned as to their effectiveness and as for the Age UK figures, well…..

Charity

Income Millions

% Spent On Charitable Activity

Number Of Staff Earning Over £60,000

Cancer Research

£493

70

160

Oxfam

£386

76

35

Save the Children

£333

89

31

British Heart Foundation

£250

46

36

Banardo’s

£245

80

35

Royal Mencap Society

£201

96

39

British Red Cross

£200

67

32

Action for Children

£198

93

38

RNLI

£173

78

42

Age UK

£168

49

41

All above figures copied, with thanks, from the article by Richard Dyson – Sunday Telegraph, Money Supplement, 21 July 2013

Crisis leads to council tax referendum call

Copied from Local Government Chronicle online
30 May, 2013 | By Mark Smulian

Herefordshire Council could become the first to hold a council tax increase referendum after an emergency meeting over a budget crisis.

This followed a review by incoming chief executive Alastair Neill, which found the budget set only in February contained errors and weaknesses.

It must now save an extra £8.4m this year and make 290 job cuts, against some 120 originally intended.

The council has saved some £21.1m over the last two years, and must save a further £32.2m over this year and the next two.

Mr Neill’s review found areas in the February budget “where the plans were not sufficiently resilient and [where] additional savings need to be made to ensure that the council delivers its plan within its budget”.

This included £1m of procurement savings which had “slipped and needed to be tackled” and £3.8m of learning disabilities grant which had in effect been counted twice.

Tony Johnson (Con), the council’s new leader, said: “We are facing a very challenging time over the next few years and as such we need to consider alternative approaches to delivering some of our services.

“Inevitably, non-mandatory services must bear the brunt of the cuts and although this will unfortunately involve job losses, it does not automatically mean the loss of services.”

The extraordinary council meeting agreed that the cabinet would consider holding a referendum to increase the 2014-15 council tax above whatever cap level is imposed.

Some 25% of Herefordshire’s income comes from council tax, which it had frozen from 2011-13. It increased it this year by 1.9%, equivalent to £1.5m.

Cllr Johnson said: “We must consider the possibility of raising council tax responsibly and proportionately across the county, as we begin to consider next year’s budget.”

Before doing so, he wanted to gauge whether residents “would be prepared to vote in favour of raising taxes to protect the county’s vital services”.

The coalition dropped Labour’s council tax cap, but substituted a system where tax could be raised above a nationally defined level only following a local referendum.

No council has yet held such a referendum, fearing both the cost and the likely outcome. In Herefordshire’s case a referendum would cost £100,000 to conduct.

In a joint statement with Unison, Herefordshire said it had agreed to reduce from three to two the number of days of unpaid leave to be taken during the Christmas period and to increase redundancy terms from the statutory minimum to 1.5 times that level.

Unison would prefer to keep in-house provision but will engage “fully in consideration of alternative business models that may be required in areas of service, where the council has to reduce or withdraw funding”.

Court to rule on council tax support schemes

Copied from LGC online
4 February, 2013 | By Mark Smulian

One has to ask if this ‘Knight In Shining Dog Collar’, isn’t picking a fight with the wrong level of government? Local government is being forced in to this position by central government. Based on the principle that everybody must pay something, government has placed the onerous task of deciding how to divvy up the council tax support budget, whilst cutting that budget by 10%.

This legal action is simply going to give the council involved an even larger hole in their budgets, unless they are able to claim back their costs from the other party. One has to ask if the complainants will put the same amount of effort in to helping these councils determine where to find the money required to fill the financial shortfall that loosing this case would create.

Two local authorities will be forced to defend their council tax support schemes in the High Court this week in the first of a string of legal-aid funded challenges by law firm Irwin Mitchell.

The first case against Haringey LBC is due to heard on Tuesday with a challenge to Sheffield City Council’s scheme due to begin on Friday. Irwin Mitchell say it has cases against Birmingham City Council, Hackney LBC and Rochdale MBC in the pipeline and warned it was “investigating several further councils”.

Sheffield cabinet member for finance and resources Bryan Lodge (Lab) said: “We will defend any proceedings because we simply have no choice but to make changes to our benefits system when we have had to make a cumulative savings of £180m over three years”.

A Haringey spokesperson said: “We took on board the views of residents, which is why those households that include claimants in receipt of certain benefits recognising significant disability have been shielded from the change.”

The string of legal challenges appear to have been initiated by Haringey residents who were put in contact with Irwin Mitchell lawyers by Paul Nicolson, a vicar who chairs the Zacchaeus 2000 Trust anti-poverty charity and Taxpayers Against Poverty, a campaigning organisation he founded last year.

He said: “I remember the poll tax in the 1990s and this is going to be worse. Taken with changes in unemployment benefits and housing benefit there will be a devastating affect on many people.”

Rev Nicolson said ministers had left local authorities too little time to devise acceptable support schemes, as defining financial hardship “requires detailed thought and there was just not enough time allowed for council to do this”.

Council tax support will be localised in April, when councils can set their own rules on who receives it but with a 10% cut in the overall budget.

Many claimants face being asked to pay council tax for the first time.

Local authorities can claim transitional relief if they limit increases for those who previously paid nothing to 8.5% of the tax level, but this is only available for one year.

A Birmingham City Council spokesperson said: “The council believes that the scheme is fair and lawful and will strongly defend any legal proceedings.”

He added that Birmingham thought its schemes differed sufficiently from others that “a finding against another authority would be binding on Birmingham”.

It rejected transitional relief because it would only defer the support scheme for a year and that “may not truly promote positive work incentives or support people back into work”.

Pickles defends his tough love approach

If it wasn’t so bloody infuriating to read such utter b******ks from this blustering windbag, it would be comical. Promoting his vindictive and spiteful sound bites as ‘tough love’, hopefully will attract the ridicule it deserves from all corners of local government. Disappointingly, the editorial page of the Daily Telegraph will be falling over itself, in the next day or two, to praise this latest guff.

Copied from Local Government Chronicle online
4 February, 2013 | By Ruth Keeling

Communities secretary Eric Pickles has professed his “love” for local government, praised it for doing a better job at cutting the deficit than the rest of government.

The declaration came after a tumultuous few weeks during which more than 30 Conservative council leaders wrote a joint letter of complaint to the prime minister warning of a “fractious relationship” with ministers.

Speaking at the New Local Government Network’s annual conference, Mr Pickles declared: “I love local government.

“Sometimes I do take liberties in trying to push you on…but it is on the basis of a loving relationship. I just want you to do a little bit better.

“I am there cheering you on, I want you to do better and you can do better.”

He added: “Local government has been absolutely outstanding in dealing with the deficit. If other bits of government had shown your resolve we would be in a better position.”

Mr Pickles was responding to a question from Peter John (Lab), leader of Southwark LBC, questioning the mixed messages from ministers about the role of councillors.

“Two years ago you were questioning the need for a chief executive, but then two weeks ago [former housing minister] Grant Shapps said we were the equivalent of scout leaders. Are we volunteers or proto-chief executives?”

Cllr John was referring to a BBC interview during which Mr Shapps argued that an increase in councillor allowances in recognition of their time and career sacrifice would be inappropriate as they were “volunteers”.

Mr Shapps’ comments has sparked an angry response from councillors, especially as they came shortly after local government minister Brandon Lewis had called for councillors to be barred from the Local Government Pension Scheme. Mr Lewis has also argues they were “volunteers” but not “professional, full-time politicians”.

Mr Pickles’ protestations of love for local government were dismissed by shadow communities secretary Hilary Benn whose speech to the conference came immediately after Pickles’.

“It is no good asking local government to take on this challenge [of falling funding and rising service demand] if at the same time the people expected to take on the challenge are criticised, patronised and belittled.

Prepare for ‘widespread financial failure’, ministers warned

Copied from Local Government chronicle online
30 January, 2013 | By Ruth Keeling

The government must establish mechanisms for dealing with “widespread financial failure” in local authorities, the National Audit Office has warned in its first assessment of the sector’s financial robustness.

A report by the watchdog said Whitehall was failing to understand the combined effects of its policy reforms on councils’ finances. Despite councils having “generally coped well” with the significant cuts made to their budgets, the NAO’s head Amyas Morse warned that councils would struggle to absorb further cuts over the next two years without reducing services.

“The [Department for Communities & Local Government] will need to be able to detect emerging problems and respond flexibly and quickly,” Mr Morse said.

Margaret Hodge, the Labour chair of the public accounts committee, went further, describing herself as “alarmed” by details in the NAO report and describing the lack of transparency over the scale of the cuts ministers had made to council budgets as “extraordinary”.

“The department needs to make clear what it will do if multiple authorities fail financially,” she said.

DCLG ministers and officials will be expected to appear before the committee’s MPs to answer questions on how they have assessed risks and intend to monitor for failure.

“My committee will expect the department to provide us with a clear statement on the financial impact of the government’s changes to authorities’ funding and what this might mean for local services,” Ms Hodge added.

The NAO report details several significant funding and policy changes that have heightened risk and uncertainty for local government.

And in a key finding, it claimed some Whitehall departments had failed to provide DCLG with costed estimates of the effects of their policies on councils.

The watchdog’s researchers discovered that the Department for Education’s 2010 spending review submission failed to include an estimate of aggregate cost pressures or possible cost savings across children’s services.

This omission resulted in DCLG assuming cost pressures on children’s services would be no greater than inflation over the spending review period.

The NAO also discovered that Whitehall departments lacked data on how policy reforms would hit different regions.

Research by the Association of Directors of Children’s Services last year revealed that demand for services had not only gone up – meaning service costs outstripped inflation – but also that geographical cost variations ranged from -30% to +100%.

LGA chair Sir Merrick Cockell said: “It is concerning that the departments examined by the NAO had not fully scoped the demand for and cost of delivering services to different areas and that not enough effort was made across Whitehall to assess what savings were possible before cuts would start eating into frontline services.”

Speaking as the government embarks on a new spending review, Sir Merrick called for assessments of cumulative impact of changes to become “a basic feature” of future government decisions.

DCLG did not respond to the specific recommendation of the NAO report but said: “Every bit of the public sector needs to do its bit to tackle the deficit left by the last administration, including local government which accounts for a quarter of all public spending. Councils need to do their bit to deliver sensible savings, and in turn, protect frontline services and keep council tax down.

“Our broader local finance reforms will reward councils which promote local jobs and enterprise, driving economic growth and making councils less dependent on Whitehall handouts.”

A Department for Education spokesperson said: “Local authorities know best how to meet the specific needs of their communities. That is why we have removed ring-fencing from a number of grants so that local authorities have more freedom to spend their resources where they are needed most – on disadvantaged children and families.

“We are working with local authorities to consider the possibility for efficiencies in major spending areas.”

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