Here’s the full text that Isle of Wight council leader, Cllr David Pugh, read from at last night’s Full Council meeting. As with any public speaking, the words that he used in the chamber will have varied from this. VB has added subtitles too.
As we weren’t allowed to audio record the meeting, this is the closest that we’ll get until the official IWC recordings are released -Ed
Introduction
Chairman, thank you for the opportunity to set out our budget proposals for the year ahead.
Last year I highlighted the considerable level of scrutiny applied to and interest received in the budget we were considering at that time. This year, the proposals we have on the table have understandably generated a far greater and more significant level of interest and public concern.
We have had to consider a wide range of options that affect frontline services, with a huge amount of reluctance. All of us here this evening are residents and members of the Island community ourselves, and it gives us no pleasure whatsoever to be considering decisions that fundamentally change the services we offer to the public. Much of what we bring before members this evening we do so with a heavy heart.
“Our critics are all too often keen to caricature us”
I say all of this as I know that our critics are all too often keen to caricature us as being willing enthusiasts for these proposals – as if somehow we came into local politics to make decisions such as this. It suits the political narrative of some of our critics to paint us out as such – but nothing could be further from the truth. Over the past six years, this administration has invested significantly in public services on the Island, and in many cases investing significantly more in some priority frontline services which residents have identified as important. We have seized the opportunities presented by government funding, particularly in healthier times, to provide a range of additional services which have benefitted the lives of many Islanders. I only have to highlight our spend on concessionary fares, and the additional discretionary elements we were able to provide in the early years, to demonstrate our commitment to investment in public services. We are all enthusiasts for the Island, and for myself as a native Islander, it has been a privilege to oversee – with my predecessor Cllr Sutton – significant investment in services which had been neglected for many years. Even now, we are still catching up with years of neglect – neglect on our roads, neglect in modernising our buildings and also the way we do business. Even now, we are still working towards delivering one unified council which should have been taken forward in 1995 when we became a unitary authority. The proposals for making greater use of this building have that clear focus behind them.
Committed, to investing significantly in our public services
So why do I mention all of this? To highlight that this administration remains committed, as it has been over the past six years, to investing significantly in our public services. However, we can only work with what we’ve got. It is therefore with great sadness that we are this evening having to make decisions on where we reduce expenditure, in order to deliver a lawful and balanced budget for next year. The financial circumstances facing local government – and indeed the rest of the public sector – gives us all pause for thought as we recognise the reality of the debt crisis that the whole country is having to deal with. But I should stress that this budget does continue to invest significantly in services, with increased investment in adult social care, children’s services (including social workers), school reorganisation, the fire service, economic development and community transport – which I will come onto. The proposed capital investment in leisure facilities is also long overdue and much needed. This is a budget that continues to invest, but regrettably at a reduced level due to the current financial circumstances.
We have more than rehearsed the arguments in this Chamber about why we are in this mess, and there remain some clearly divergent views about how the country found itself in a situation with over £1 trillion pounds worth of debt. However what is not in doubt is the fact that that debt exists, and the Coalition Government has determined to pursue a strategy that would seek the structural deficit eliminated over the next four years. As I have said before, we are not here to debate the merits of that strategy. But it is their strategy, and local government has to play its part. This administration made that point clear in our 2009 manifesto, when we advised the Island public of the likely implications of the crisis that the Labour Government was due to leave behind.
Facing very unpalatable decisions
However, none of us at that time fully appreciated the scale of the crisis – and nor did we appreciate the scale of the funding reductions that would be applied to local government. This does lead us to face some very unpalatable decisions.
In developing these budget proposals, we have sought to maximise the level of savings that could be achieved, without affecting frontline services. In the revised proposals here this evening, we now have only £11m worth of savings from what would not be considered to be frontline services. These have been described as cross council savings – those in management, back office and administrative functions. This includes one proposal from the Independent Group budget, which we are looking to incorporate.
Reductions to some frontline services
Regrettably, our savings target is much higher than this – as members are more than aware. That does leave us having to look at reductions to some frontline services. I should add that the size of the service reductions we are having to consider for next year are as a direct result of this frontloading of the reductions in funding. Our calculations show that if the Government spread the reductions evenly over a four year period, rather than the bulk being placed into 2011/12, then the Council’s savings target for next year would be reduced to £11.6m. The frontloading does lead us to therefore consider frontline service reductions, which I will shortly turn to. I would however like to focus briefly on the back office and management savings.
Inevitably, the proposals for reductions to frontline services have attracted the greatest amount of attention. So much so that opposition to these proposals has often demanded that we make reductions in management costs and bureaucracy before affecting day-to-day services. What I hope I can now, once again, be abundantly clear is that we are making those significant reductions in management and bureaucracy before we even look at frontline services. Yesterday, we published a delegated decision proposing a new Chief Officer Structure that would contribute towards a proposed saving of £6.475m next year in management costs. There will be a 36% cost reduction with a deletion of 38 senior management posts from 103 to 65 and a 33% reduction in other principal officer graded posts. We are also exploring ways of sharing services with other authorities to further reduce staffing costs.
Significantly reduced capacity across the local authority
However, I should stress that there will be a noticeable difference to the level of service provided as a result. The senior officers who will be leaving the authority are real people who have been doing real jobs. The significantly slimmed down senior officer team will mean that there will be significantly reduced capacity across the local authority. We have applied a general principle that all senior and middle officer posts remaining in the organisation will either be taking on more work, or taking a pay cut, or in some instances – both. I believe that this is something we should recognise, as far too often the issue of senior staff becomes too easy a target for those who wish to wish to have a cheap shot at the Council.
I make no apology for this Council employing, at appropriate levels of remuneration, a range of specialist and highly experienced staff to oversee the services we are required to provide. I consider that nowhere is this more appropriate than in the areas of child and adult protection, where we are investing significantly. I firmly believe that the IW Council would be at serious risk of failing to meet its statutory duties of safeguarding and other requirements if it did not appropriately invest in management and specialisms to meet these requirements. Our revised approach to senior management will, as I have highlighted, make significant reductions in the overall cost of senior posts – but we can only go so far. The proposals we now have on the table stretch the senior team incredibly thin, and it would be wrong of me not to highlight that there is always the potential for increased risk of failure to comply with statutory duties as a result.
Saving £7.25 million
It is these officers, and indeed staff across the council, who are working extremely hard to uncover any possible solutions to help us avoid service cuts. We understand that residents want to see senior management reductions and yet time and time again, no matter how we report this, the fact that we are saving £7.25 million, I repeat, £7.25million in staffing costs in a full year and taking over a third out of the senior management structure – seems to fall on deaf ears. We will continue to look at more ways of reducing staffing costs, and that is why we are proposing to take on board the Independent Group proposal for saving £88k in the adjustment to the casual mileage allowance.
Paragraph 65 of the report before members highlights the real terms reduction in funding, taking into account inflation, increased service costs and identified need. In previous years, the IW Council received an increase in funding, to help meet its increased costs in inflation, landfill tax, national insurance and demographics, etc. For 2010/11, this increase was £2.267m – a sum which contributed a small amount to meet the increased service need and additional costs for that year.
It is therefore clear that any savings target for 2011/12 has to take into account not just the headline reduction in government funding, but also the identified increased service need, for which no contribution from government is due to be made (as had been the case in previous years).
Careful financial management
I would now like to briefly touch on the out-turn position for the current financial year. Turning to paragraph 107 onwards, I would like to draw members’ attention to the effective budget management that has taken place to ensure that we should not overspend in overall terms in the current financial year. This is despite is a significant amount of pressures, not least from adult social care and children’s placements, over the past 12 months. This is due to budget management actions to control spend, reduce costs and make savings. This has been achieved through careful financial management and oversight by our finance officers.
However, this has been achieved by using certain one-off measures and there are a number of issues which will re-emerge in 2011/12, as set out in paragraph 109. Adult social care remains one of our biggest areas of spend, and we are taking action now to adjust the base budget by the current additional spend of £3.4m, which will be a continued need next year. This has been coupled with assessed further demographic factors of £2.2m. Both of these figures have contributed significantly to the £17.8m savings target for next year. Members will be aware of savings proposals for some £4m in adult social care for next year, which leaves us proposing a net increase in expenditure in this area of some £1.6m next year. This demonstrates that, despite an overall fall in funding, we remain committed to providing for the most vulnerable in society and increasing our investment in the services that support them.
We have additional pressures in parking income and children’s placements, which need to be built into the base budget. As C4 of Appendix 5 makes clear, these will be addressed next year by offsetting these amounts from the savings in capital financing costs, which are calculated to provide a total of £2.25m.
Reserves and balances
Turning now to reserves and balances, the Strategic Director of Resources and S151 Officer has consistently said that a minimum of £5m of general fund balances need to be maintained. In addition the Council needs sufficient reserves to meet any know or potential risks that are not budgeted for.
At 1st April 2010 general fund balances stood at £7.273m and risk reserves and provisions at £5.750m a total of £13.023m. This is a relatively healthy financial position but there are a number of financial risks that the Council needs to take account of:-
- a) The outturn for 2010/11, albeit projected not to overspend in overall terms, is still a risk. Any overspend will need to be met from general fund balances.
- b) Redundancy costs estimated at some £1.5m – £2m need to be met. Only £500k has been set off against the savings. There is a risk that following restructuring and delivery of the management savings and other reductions this could be higher.
- c) This could leave the general fund balances at the £5m level.
- d) The risk reserve will meet any additional costs of redundancy over and above that able to be contained within general fund balances but also as set out in Appendix 11 a number of other risks including a number of appeals and claims and outstanding liabilities.
In addition there may be further slippage/shortfall in the savings projections and for overspends in 2011/12.
Reserves can only be spent once
General fund balances and reserves can only be spent once and do not negate the need to make reductions. They can be used to meet any shortfall due to delay in making the reductions in 2011/12. The danger is that undue delay in implementing the reductions may impact on delivering full year effects in 2012/13 and a costly way of avoiding the inevitable. I will ask the Chairman of the Audit Committee, Cllr Julie Jones-Evans, to touch on these matters – as this was discussed at last night’s meeting.
I should say that we have considered the proposal for using balances, as set out in Cllr Lumley’s budget. In the circumstances where the grant loss from Government was a one off – i.e. our funding would return to current levels in a subsequent financial year – there may be a stronger case for making use of general fund balances on this occasion for meeting a shortfall for one year. However, we are all clear that the level of reductions being applied to this year will be sustained for the subsequent three years, and therefore it is clear that it would not be appropriate to use balances just to delay the inevitable. It is a more responsible approach, painful though it is, to make the reductions in expenditure this year, so that we have a sustainable base from which we make further required savings in subsequent years.
The view of the Section 151 Officer is that Cllr Lumley’s proposed use of reserves would place the council at significant financial risk and therefore it is not a proposal that he can support. He went on to say that using such a level of balances in 11/12 with the level of further grant reductions still to come would be irresponsible.
Council is facing a very challenging financial position
As paragraph 130 concludes, the Council is facing a very challenging financial position, and we have to respond accordingly. We consider that the proposed strategy strikes an appropriate balance between the need to invest in capital infrastructure to improve services and direct resources to our priorities and so forth.
However, as I stated at the Cabinet meeting a couple of weeks back, there would be some adjustments to take into account feedback from the public and also that channelled through ward members. Individual councillors have been able to gage local feeling on the proposals, and their input has complemented the detailed responses we have received from members of the public.
New Homes Bonus
I would therefore now like to turn to the proposed adjustments to the majority group budget proposals, as set out in the papers published yesterday. I would firstly like to advise members of the situation regarding the New Homes Bonus. On Thursday 17th February, the Government announced details of the this initiative, which includes provisional allocations of grant funding to a number of the local authorities, including the Isle of Wight.
The scheme will pay an unringfenced grant equivalent to the national average for the Council Tax band of each new home built in a local authority area. This will be paid for six years for each additional property.
The Isle of Wight’s provisional allocation for 2011/12 is £489,974. The Government are also clear that in subsequent years allocations will be published as part of the local government finance settlement (LGFS) timetable. Therefore in future years the provisional allocations will be announced in early December and final allocations in early February, allowing local authorities to include the grant in their budget setting process. The New Homes Bonus is intended to be a permanent feature of the Local Government Finance System.
Unringfenced funding
In announcing this last week, the Government were clear that this unringfenced funding could be used to support locally determined priorities. Taking this into account, and the fact that the government have called on councils to consult residents to agree how this funding is used to meet local needs, I am proposing that we use £367k worth of this allocation to support revised priorities within this budget, in area in which the Council has already received public feedback. The remainder of £123k of the New Homes Bonus funding (subject to final allocation) will be allocated to priorities in due course, following further consultation with the public. We consider that what I have outlined is an appropriate use of this additional funding, following the provisional allocation last Thursday.
Libraries
I would now like to turn the issue of libraries. This has undoubtedly been the issue which has generated the highest level of interest, with over 1,500 responses to the consultation. My colleague Cllr Brown has already set out – at the Cabinet meeting – our initial response to the consultation, and the final set of proposals have now been published, to be considered at a further Cabinet meeting next week. These proposals respond to the consultation and also significantly take into account the helpful input of Mr Tim Coates, who Cllr Brown met with last week.
This feedback has come not just from the public, but from fellow elected members. There is a general recognition that the library service can be delivered in a different manner, and significant savings can be achieved in doing this. Mr Coates himself suggested a level of saving greater than what we are proposing this evening, but I accept that that proposal was based on a headline assessment of our central costs – many of which are actually applied to individual libraries. The level of saving we are proposing would allow the IW Council to continue managing 6 libraries, and this would continue beyond next year as a long-term commitment. We are also proposing to support at least 5 community-led libraries, and we have been heartened by the commitment shown in a number of localities to bring such proposals forward – including in locations where we don’t currently have library provision. This could lead to an enhanced service with greater coverage – but at a reduced cost to the taxpayer.
£50k for computers
I would, however, like to make one further amendment to the budget allocation for the library service next year. In order to support even more fully the devolved model of library operation recommended in the Cabinet paper for 1st March and to ensure that community-engaged libraries have all the IT connectively they need, I have added a further £50k to the Library Service budget – drawing on this from the New Homes Bonus funding allocation. This additional funding should also enable us to adjust upwards the IW Council operating hours where there are identified pressure points in our proposed model. This does respond to some of the specific and further concerns highlighted by individual members, particularly Cllrs Scoccia, Ward, Sutton and Cameron, who have been very much involved at a community level in the discussions on the future of their libraries. I welcome their positive and constructive input into this process, along with those members in other parts of the Island where we are bringing forward alternative models of delivery.
I should stress tonight is about making a decision on what budget to allocate to the library service. The operating arrangements, are due to be decided next week, and I know that Cllr Brown would welcome further input from members ahead of these deliberations, to ensure that we get a service tailored to meet the specific needs of local communities. The key point I would stress, however, is that savings can be achieved in the library service – and I note that ours is the only budget proposal on the table this evening that acknowledges that. All other proposals appear to stand still, and therefore do not embrace the overall thrust of what Mr Coates was encouraging us to do last week.
Further debate and discussion
This subject will clearly generate further debate and discussion, and I look forward to that taking place ahead of next Tuesday’s Cabinet meeting.
I would now like to turn to the issue of public conveniences. We currently do have the highest number of public toilets per head of population anywhere in the country. It has long been recognised that we need to look at our provision to see how we can best meet the needs of the Island as a whole, and its visitor community. I fully accept that the original proposals did not sufficiently take into account this need, and was not appropriately weighted. I am pleased with the amendments that have been put on the table for next week’s Cabinet meeting, and the final schedule of savings shows a reduced saving next year that allows for this. I would particularly like to thank members who have inputted into this process and informed the final proposals, which are more responsive to community needs. This additional investment in public conveniences will come from savings in democratic services.
Waterside Pool
We have been pleased to welcome the proposal by a Ryde group with a view to keeping Waterside Pool in operation. As I have highlighted in this paper, this proposal embraces a wider potential transaction than the pool building and will take time to assess and to clarify its impact on Council finances. Therefore, following consideration of this proposal, and the representations made by local members, we are proposing a reduced level of saving to support the handover process and work towards making the proposal an implementable reality. This reduced level of saving will also be met by savings in democratic services.
Members have understandably raised concerns about lifeguards no longer being available in Ryde, Sandown, Shanklin and Ventnor. Whilst this is a discretionary service, and whilst there are many stretches of beach including in these locations that don’t have lifeguard cover, there was a feeling that there should be some ongoing support from the IW Council to encourage community initiatives for lifeguard provision in these locations where there are plans being developed. With this in mind, and I am particularly encouraged by the work that has taken place in Ventnor by Mark Compton-Hall in conjunction with Cllr Scoccia, we are proposing to allocate £25k to fulfil our commitment to work with parishes and other groups in the development of lifeguard provision in these locations.
More details will be developed in due course, but I know from my own community in Shanklin that there is an enthusiastic desire to make good use of such funding to work towards an enhanced level of provision across the whole stretch of our beach. We will be seeking to join forces with Ventnor on taking this process forward, and would look to work with Sandown and Ryde also.
We covered the revised approach to the Floating Bridge at the Cabinet meeting, and I will leave Cllrs Webster and Giles to comment on this further if they so wish. We will meet the gap in income that had been projected for the foot passenger proposal by drawing on funding from the New Homes Bonus allocation and also the saving from the casual mileage allowance adjustment.
Independent Group budget
At this point, I would like to turn briefly to consideration of the Independent Group budget, although I accept that is being covered later this evening. We welcomed the early publication of their proposals, and have applied a constructive level of scrutiny to their proposals – which is to be expected. I appreciated the full and detailed response they provided to my queries yesterday. We have sought to incorporate two elements of their proposals – the proposal on the casual mileage allowance, and also their proposal for a Community Bus Fund. In relation to the latter, we are proposing to apply this funding in a flexible manner, alongside remaining funding from non-contracted services post 31 August 2011. We consider that this money should be used to support either community bus initiatives or the continuation of subsidised bus services where considered appropriate. I am grateful to the Independent Group for bringing this idea forward, and further I have welcomed the input of individual members – particularly Cllr Cousins, Cllr Mazillius, Cllr Stephens and Cllr Ward – who have specific issues in their own areas in relation to public transport access. I hope that we can work constructively with these members and others to determine how best to apply this particular funding.
I would now like to return briefly to the savings highlighted at C7 and C8. The proposed to reduce the casual mileage allowance from 46.9p to 40p per mile in line with HMRC tax exempt rate was put forward by the Independent Group, and we are grateful to them for their work in developing this. I should advise members that since the majority group has proposed the incorporation of this proposal, we have received a representation from Unison arguing that this is a serious erosion of national terms and conditions. Having discussed with colleagues, we do not share this view, and do not consider that bring the mileage allowance into line with the HMRC tax exempt rate is anything but reasonable and appropriate in the current climate. I will advise members that we do intend to consult on this proposal, and subject to the outcome of that consultation, a final decision will be made as to whether to implement it. Clearly we may need to make further use of the unallocated provision from the New Homes Bonus is this proposal is not subsequently implemented, but it remains our intention at this stage.
With regard to the saving at C8 – further savings in democratic services – the breakdown of this is provided page 2 of the revised Appendix 5. We hope to deliver further savings in this area, but we have to have due regard to the recommendations of the IRP, which Full Council has agreed it will abide by.
Turning to the overall recommendations, I consider that the revised and final recommendations before members this evening will deliver a balanced budget. However there are a range of assumptions behind these savings, and a number of risks which are set out for the year ahead.
Taking this into account, and the need to closely monitor budget pressures during the course of this critical year, I believe that we should, once again, give Full Council the opportunity to revisit the budget – by means of a mid-year review – in September, at which time we can assess the implementation of the budget so far (the full first quarter figures being available) and will be able to make any revisions in light of this and any continuing national changes in policy. There will be regular reviews on a regular basis in between also.
Council tax freeze of 0%
This budget proposes an increase in the council tax freeze of 0% – which is at least some comfort in the current climate. This freeze is on top of the modest increases which Islanders have benefited from over the past five years. As a result, the overall council tax level – remaining at £1,289.80 for a Band D property, is considerably lower than it would have been had another administration remained in charge post-2005. This is something which is undoubtedly welcomed by many Island residents.
Of course, some parish councils are choosing to increase their precepts, and there are a mix of resolutions from across the Island. As members will be aware from the recommendations, we are proposing to set up a council tax setting committee to finalise the level of council tax, taking into account we agree tonight, but also the decision of the police authority and all parish councils. There are, as I understand it, six remaining parish councils – including my own – which are still to finalise their precept level for next year. The council tax committee will be able to incorporate these final decisions into the final resolution. I am therefore proposing that we delegate responsibility for this final task, along the liens as set out in paragraph 3(8) of the recommendations. This meeting will take place on 1 March 2011.
Recommendations as a whole
Turning to the recommendations as a whole, I would ask members firstly to note the decisions on adult social care made by Cabinet. It is of course within the gift of members to make budget allocations that run contrary to these policy decisions, and we would then need to revise the policy decisions accordingly, ahead of implementation. However these current policy decisions do align with the budget decisions I have put before members this evening, and we are recommending that they are noted in this context. Cllr Mazillius comprehensively covered these matters at the recent Cabinet meeting, so I will not dwell on them any more here.
I therefore ask Full Council to agree the MTFP as set out in Appendix 1; the revised schedule of savings that I have just talked through (with the amendments); an increase in the IW Council budget requirement by 2.5% and a freeze being offered to residents; and the overall capital programme as set out in Appendix 8. I also look for your support on the detailed recommendations set out on the second page of the recommendations sheet.
Propose these recommendations
I would like to propose these recommendations to members as offering a sound, flexible and responsible budget, which has been adjusted to respond to the particular concerns of local residents, as much as we can in the current economic climate. None of these decisions are easy; and it has been a long journey to get to this final set of recommendations. There will be those who still disagree with us, but I would like to say to those who do, this is not the final say on this budget.
Whilst this agrees the overall framework, there is much more work to do in the coming months, and the mid-year review in September. This is an ongoing process in which we wish to engage as effectively as possible with members from across this Chamber, the wider public and interest groups. But we must set a clear direction now with a balanced clear budget – I believe that these proposals do that.
