What do we do if the money runs out? council chief asks Government

Isle of Wight Council’s Chief Executive, John Metcalfe, has written to the Government asking them to urgently clarify how it will judge that any council: “has reached the ‘tipping point’ where it has insufficient resources available to meet its legal obligations”.

John Metcalfe - Now CEO of Isle of Wight council - 25 Nov 2015

This in from the council, in their own words. Ed


The Isle of Wight Council’s Chief Executive, John Metcalfe, has submitted a formal response to the government on behalf of the council, as part of their consultation on the local government financial settlement plans.

The representations made, further outline the challenges of the UK’s largest inhabited Island, demonstrating its unique position in respect of the economy and demographics; leaving it out of step with its near neighbouring areas on the mainland.

In his letter to the Department for Communities and Local Government (see at bottom of article), Mr Metcalfe suggests the scale of the challenge is such that there is a real concern: “whether the council will be able to fund even statutory services, and consequently whether it will be viable in the very near future,” and that government needs to clarify urgently how it will judge that any council: “has reached the ‘tipping point’ where it has insufficient resources available to meet its legal obligations”.

Government asked to re-evaluate calculations
The letter also requested that the government take proper heed of the financial challenge facing the council and to re-evaluate the calculations of the council’s core spending power, which makes no provision for the costs of services increasing through inflation or demand and, which amount to a figure of at least £26 million.

These assumptions, combined with an 89 per cent proposed reduction in revenue support grant from the government are central to the council’s estimated budget gap of £32 million, ongoing over the next four years.

Figures assume 3.75 per cent council tax rise
The scale of the budget gap would increase if the council were not to introduce a council tax increase of at least 3.75 per cent, which has been assumed in the government’s figures.

As part of its budget position for 2016/17 and 2017/18, the council has already considered using £4 million from its reserves in the first year, and a further £1 million in year two. Although at the end of March 2015 the council had total reserves of £46 million; these are not all available to assist in meeting its financial challenges, as recently suggested by the DCLG. £30.6 million to meet known commitments in future years and a further £4.4 million has already been used to support the provision of services in the current financial year.

Minimal reserves
Once the proposed additional £5 million has also been withdrawn from the remaining reserves, the council will only hold the minimum level of reserves that a council of its size should have in order to cover any financial shocks that it may encounter in future years.

Councillor Jonathan Bacon, Leader of the Isle of Wight Council, said:

“We have made considerable representations to government about the plight of the Island, and what we require from them in terms of support.

“I hope they have listened and recognise the uniqueness of our situation, and that, following their consultation exercise, that they reassess their approach to our future financing.”


Any views or opinions presented in the comments below must comply with the Commenting 'House Rules' and are solely those of the author and do not represent those of OnTheWight.

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38 Comments on "What do we do if the money runs out? council chief asks Government"

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Frank James

Q. What did greedy gambling bankers do when they needed to pay for their reckless losses?

A. Made those of us not responsible for their behaviour pay up by getting their government mates to take more taxpayer’s money.

Q. What do the government want to do for their mates with Trident, HS2, service privatisation profit/ tax avoidance addictions, etc. etc….?

Rob

They will par shoot their TORIE boys/girls in from Whitehall to show us how its done.
THEN fines us for the pleasure of having no money. Due to being screwed us till the pips sweated.

This is what happens when you vote for millionaires that have never done a hard days work in their life’s.

Ali Hayden.
our Island + its residents need an urgent answer to Johns letter. With the Isle Of Wight Council cutting so many services, the government cut in funding is hitting the Island hard. Many Town + Parish councils are trying to take on local services, fine for larger town + parishes with an appropriate income. Because of the Islands parish boundaries, this isn’t possible for those with a… Read more »
mat
Mr Metcalfe has highlighted “Concern”,which is fair enough. The Councillors will have to show their political “opposition”. The Government will indicate that there is room for more efficiencies and lean to be cut from the bone and “waste”to be dealt with. The only language they will respond to is one that contains rejection. If the opposition is weak they will carry on.They will only back off if… Read more »
phil jordan
Stephen: The Section 151 officer……. who cannot allow that to happen. There are various and varying stages that an Authority *might* go through if they were unable to set a lawful budget. In essence, of course, if a budget is set…the principle is that you cannot get into a position as you describe. (because the work is then to ensure you meet budgetary parameters) The real problem… Read more »
Stephen
Interesting to conjecture on the repercussions should the IWC be forced into defaulting on its NI, employer pensions contributions to the Local Government Pension Scheme and VAT & PAYE owed to HMRC. Some VAT-able purchases are unavoidable; energy, phones + broadband and hygiene/cleaning materials come to mind. Also maintaining the Island Roads contract could be in jeopardy Who is the ‘responsible officer’ at IWC should any of… Read more »
In Denial

There is some interesting wording in this letter! In particular, the repeated reference to the fact that the Island is becoming “unsustainable” and whether the Council will be “viable”.

I could interpret this as the first stage of the Council actually asking to be taken over by another authority!

phil jordan
In Denial: Then you mis-interpret what is being said and what problems are being expressed. Currently, there are no proposals for that eventuality and devolution (even if that were to take place) is absolutely nothing to do with amalgamation of Authorities. We are telling Government that the Authority cannot function or remain sustainable as an Authority under the current funding arrangements. It’s a fairly simple financial problem….not… Read more »
In Denial
Phil – many thanks for the clarification. It does suggest however that there is a view that this action will force the Government to look at additional funding. I have very little experience of how Government works and view this from a business perspective. In business, if I sent a letter to my superiors saying that my business is unviable … they would respond by closing me… Read more »
phil jordan
In Denial: Thanks…I understand that perspective. Local Government doesn’t work in quite the same way and our approach is to explain to Government that the current funding mechanism (which is impacting ALL Authorities to a greater or lesser extent) has now reached a point in time which is just unsustainable. It cannot continue with our income – as set by Government through Revenue Support Grants – after… Read more »
Pedant

Hi Phil, agree with what you’re saying and good luck with it all!

However, I take issue with suggestion that “devolution (even if that were to take place) is absolutely nothing to do with amalgamation of Authorities.”. Isnt the proposal to create “combined authority”? Albeit a combination of strategic infrastructure/investment functions. That is an amalgamation according to my dictionary…

Shirley Burnham
When asked for clarification of the 1964 Public Libraries and Museums Act, Ministers of the DCMS normally explain that they defer to the judgement of councils on how to organise a local service so as to keep it compliant with the Law. However, the 1964 Public Libraries and Museums Act does set out in s1(1) what the duties of the Secretary of State are when there is… Read more »
phil jordan

Shirley Burnham:

…and case law already exists (does it not?) on this very issue….which also might point us in a suitable direction…?

Shirley Burnham

You mean this,from 2011 ?

Community management of library services
– legal issues http://libraries.communityknowledgehub.org.uk/sites/default/files/legal_note_-_community_management_of_library_services_-_overview.pdf

Or are you looking at other references? If so, can you provide links to them please.

Colin

and the Section 151 officer is?

oh we haven’t got one…Mr Burbage is still standing in…

phil jordan

colin:

…and your point is……?

Dave Burbage IS the section 151 officer and has been for a good while…

The post has been discussed within Employment committee a week ago and recommendations are coming out of that….

…but I’m not sure what your point is, frankly.

The fact is….we DO have a S151 officer …and, incidentally, cannot operate without one.

Hope that clarification helps…

Colin
@phil come on Phil… it was you who pointed out that the only reason the council has a Section 151 officer is that Mr Burbage has stayed on passed his well publicised retirement date. You also stated that others within the council declined to move up to the role. The council does not have a head of finance and has not yet decided whether it wants a… Read more »
Bones

I may be naive but I really can’t understand how we can send billions to finance countries abroad…including India who has her own space programme while being unable to pay for our own basic services. Can anyone enlighten me ?

billy builder

Tory policy

Cicero

“151 Financial administration.

Without prejudice to section 111 above, every local authority shall make arrangements for the proper administration of their financial affairs and shall secure that *one of their officers has responsibility for the administration of those affairs.*”
(Local Government Act 1972 s.151)

Phil jordan

Cicero:

the one of those officers is our s 151 officer.

Cicero

Ohil- as statutory post then not just because DB is still around then?

Cicero

Ooops Phil!

Phil jordan
colin: once again, this council has a S151 officer. that post is held by Dave Burbage. You tell me when the very first time it was we knew we had to fill this role? …….then we can look at the employment committee to see what they did to start the process going….. for it is the committee that make such decisions……So, in your knowledge, what was the… Read more »
Colin

@ phil….probably best you stop digging…

phil jordan

colin:

“stop digging”……..???

On what?

You have made an incorrect statement and I have corrected you.

This Authority has, contrary to your assertion, (and as it is legally bound to do) a S151 officer in place.

Colin
@ phil It was you that said Mr. Burbage has stayed on past his retirement date as the council had not filled the role of Section 151 officer in a previous thread. He apparently was the only person employed by the council who could fulfill the role as others had declined to step up the the position. So to clarify, perhaps you can tell us when the… Read more »
phil jordan
Colin: final word from me on this…. Dave Burbage resigned as MD. At that time he was ALSO the S151 officer. That’s two roles. The employment committee chose to go out to recruitment for a CE/MD rather than promote from within. A more recent employment committee decided to recruit a S151 officer. Currently, we have a S151 officer… Dave Burbage. The date the MD resigned is irrelevant… Read more »
Colin

@ phil

So you are saying Mr. Burbage hasn’t resigned as the Section 151 officer. I understood that Mr. Burbage was taking retirement as was widely reported in the press. So to clarify then, Mr. Burbage has only retired from the MD postion but not from any other position he has held on the council? Is this correct?

So what is he being paid for this role?

Tim

“The separation from the mainland makes the cost of delivering services higher, makes it very difficult to attract business and grow the local economy and reduces the opportunities of sharing services with other Councils, reducing costs and implementing income generating initiatives”

the shadow

1 the councillors are required in law to make a lawful budget
2 there could be financial penalty’s against them
3 named votes would be scrutinised to see who was to blame
4 resignations now would be good

Geoff Lumley

All Council votes are named and recorded in easily accessible Minutes. Have been for at least 4 years……

the shadow

ok i see i got -7 but at least i told you all before the iwcp .MR lumley wast it your self who once produced a alternative budget that would have been unlawful i think i have a copy somewhere

Frank James

3pm today, BBC Radio 4: Money Box Live: How could the shake-up in local government finances affect you?

Lesley Curwen and guests look at the financial challenges facing local councils and ask if your local services could be affected. Call 03700 100 444 from 1pm to 3.30pm with your views and questions or e-mail moneybox@bbc.co.uk

(They have been directed to this OTW item).

Darcy
Listening to Money Box, I learn that Bristol Council have set up an innovative solution through a wholly owned energy company providing gas and electricity services to residents. They buy through the wholesale market with a view to increasing generation though local initiatives. I would have thought the island was ideally set up for this with increasing generation available from solar, wind and tide. Think outside the… Read more »
Phil jordan

darcy:

we are in the process of doing just that…… and more….
we have already committed to a number of renewable energy opportunities and are looking to expand that approach through exactly the same way as Bristol……

Black Dog

Let us hope it better than the investment made by the last lot in Tidal energy!!!

phil jordan

Indeed……but one of only a number of shocking legacies they left us to sort out….