Bleak future for Brent Council finances and our services

The Scrutiny Committee on July 11th will be discussing this presentation on Brent Council's financial position and future prospects.Further cuts in services and increases in charges can be anticipated as well as a Council Tax rise.

Labour stifles the anti-cuts movement

A year ago I published a piece on Wembley Matters which asked what Jeremy Corbyn, then the new Labour leader, would do about local council cuts.  I drew attention to the contradiction that under him Labour claimed to be an anti-austerity party while local Labour councils were implementing the Tory austerity agenda by making cuts to services. LINK

In December last year Corbyn and McDonnell, responding to pressure from local council leaders who in turn were under pressure from anticuts campaigns, threw the towel in and wrote to Labour councillors telling them to set 'legal' budgets:

Failing to do so can lead to complaints against councillors under the Code of Conduct, judicial review of the council and, most significantly, government intervention by the Secretary of State.

It would mean either council officers or, worse still, Tory ministers deciding council spending priorities. Their priorities would certainly not meet the needs of the communities which elected us.

In effect this meant implenting cuts.

In March this year, just as Councils were formally approving budgets, the People's Assembly Against Austerity LINK  asked councillors to sign the following letter:

As Councillors we believe this Tory Government's ideological opposition to public services lies behind the deliberate underfunding of Local Authorities.

Councils have faced unprecedented cuts; Local Authority grants in England have been slashed, with £12.5 billion of cuts and half a million Council workers losing their jobs since 2010. Osborne has forced through 40% cuts to Council budgets meaning that local authorities face the reality of cutting frontline services including Adult Social Care and Children's Services, leaving those that rely on them at risk.

We believe that austerity is a political choice. We oppose all cuts from Westminster and believe Osborne’s plans for Local Government will only make a bad situation worse.

We call on the government to reverse cuts to council funding so we are able to provide essential services our communities rely on. Furthermore we call for an end to austerity that is seeing living standards for the majority fall.

Given the Labour leadership's instruction this meant paper opposition only, although councils tried to find alternatives by rising charges and rents and finally raising council tax. This still meant of course that the poor were paying for austerity - but by a different route.

The situation is now worse as a result of cuts in real terms to local authority education grants. LA education budgets have not been increased to take account of increased pension and national insurance contributions or the increasing number of pupils in schools.

The anti-cuts movement had argued for councils to refuse to set budgets, set illegal budgets or devise a needs based budget, as an alternative to making cuts. This to be accompanied by a mass campaign involving councillors, trade unions, voluntary organisations and the public. 

In practical terms combining the two approaches didn't work because no group of councillors took the former approach although some individual councillors voted against budgets losing the whip as a consequence.  It was then difficult for local Labour parties to mobilise the public against cuts when they themselves had implemented them.

This year, by agreeing to the freezing of the Revenue Support Grant and the associated four year action plans, councils have accepted the government cuts and boxed gthemselves in for 4 years.

The Labour National Executive Committee has now strengthened control over Labour councillors with the following  rule change:

Members of the Labour group in administration must comply with the provisions of the Local Government Finance Act 1988 and subsequent revisions and shall not vote against or abstain on a vote in full council to set a legal budget proposed by the administration.

Members of the Labour group shall not support any proposal to set an illegal budget. Any councillor who votes against or abstains on a Labour group policy decision in this matter may face disciplinary action.

My interpretation of this is that when in opposition Labour groups can decide to vote against cuts budgets but where Labour is in power individual Labour councillors cannot vote against cuts budget.  These are not just any cuts, these are Labour cuts - and therefore preferable?

I searched in vain for any reference to challenging cuts and mobilising mass campaings in Jeremy Corbyn's Conference speech.  I publish the section on local councils in full. He praises local councils for what they have done despite the cuts and describes (rather than advocates) some councils' decisions to take services back in-house. In doing so he says that this is cheaper and preserves working conditions. However this presents difficulties as year after year Labour administrations have argued that out-sourcing to private providers has saved council tax payers money whilst not acknowledging that lowert costs have been achieved by lower wages, worse working conditions, poor pensions etc.  

Even worse some councils have argued that the private and voluntary sector is more able to respond to local need in araes such as youth provision and social care.

Already, across the country, Labour councils are putting Labour values into action, in a way that makes a real difference to millions of people, despite cynical government funding cuts that have hit Labour councils five times as hard as Tory-run areas.

Like Nottingham City Council setting up the not-for-profit Robin Hood Energy company to provide affordable energy;

Or Cardiff Bus Company taking 100,000 passengers every day, publicly owned with a passenger panel to hold its directors to account;

Or Preston Council working to favour local procurement, and keep money in the town;

Or Newcastle Council providing free wi-fi in 69 public buildings across the city;

Or Croydon Council which has set up a company to build 1,000 new homes, as Cllr Alison Butler said: “We can no longer afford to sit back and let the market take its course”.

Or Glasgow that has established high quality and flexible workspaces for start-up, high growth companies in dynamic new sectors.

Or here in Liverpool, set to be at the global forefront of a new wave of technology and home to Sensor City, a £15million business hub that aims to create 300 start-up businesses and 1,000 jobs over the next decade.

It is a proud Labour record each and every Labour councillor deserves our heartfelt thanks for the work they do.

But I want to go further because we want local government to go further and put public enterprise back into the heart of our economy and services to meet the needs of local communities, municipal socialism for the 21st century, as an engine of local growth and development.

So today I’m announcing that Labour will remove the artificial local borrowing cap and allow councils to borrow against their housing stock.

That single measure alone would allow them to build an extra 12,000 council homes a year.

Labour councils increasingly have a policy of in-house as the preferred provider and many councils have brought bin collections, cleaners, and IT services back in-house, insourcing privatized contracts to save money for council tax payers and to ensure good terms and conditions for staff.

Corbyn's election campaign inspired many independent activists (and not a few Green Party members) to join the Labour Party and gave the left inside the Labour Party fresh energy. 

The problem now is that on the ground, and impacting on the poor, they face 4 more years of local government cuts, 'efficiencies' where fewer workers do the same or increased amounts of work, council tax rises, increased service charges, dodgy regeneration projects to increase the council tax base and privatisation.

Maintaining the morale of new recruits in such circumstances will present a real challenge.

Chief Finance Officer's Briefing Note on RSG Four Year Funding Settlement

Following postings on this blog and thr Brent Conservative Group's attempt to get the issue debated, Conrad Hall, Brent Council's Chief Finance Officer has issued this briefing note:

Four year funding settlement

1.     As part of last year's local government finance settlement DCLG allowed local authorities to fix their revenue support grant (RSG) settlement until 2019/20 and set a deadline of 14 October by when local authorities had to decide whether or not to accept the offer.  After this date any councils which have not responded would be considered to have rejected the offer.

2.     To accept the offer councils merely need to write to DCLG confirming their decision and submit an efficiency plan.  There is little or no guidance on the efficiency plan, except that it should be brief, no more than four pages.  Most councils that have accepted the offer to date merely seem to have submitted their existing MTFS or a version of it, which has been acceptable.

3.     The option to fix RSG through to 2019/20 has therefore been known about for almost a year.  It has been referenced in update reports on the budget and financial position during this period.  The budget report to council on 22 February 2016, for example, set out what was known at that time and commented that "officers have assumed that funding from 2017/18 to 2019/20 will be as set out in the draft four year settlement".

4.     It is therefore clear that the financial strategy already agreed was based on an assumption that the option to fix RSG would be accepted.  Of course, Members could decide otherwise.

5.     However, the arguments for fixing the settlement are as strong now as they were seven months ago when the current budget was set.  Certainty in financial planning is always advantageous and it is undoubtedly the case that the local government sector has persistently argued for longer-term funding settlements than the single year normally allocated by DCLG.  Arguably this makes it rather perverse then to reject an offer to provide that very certainty.

6.     Given this, the argument to reject the settlement only makes logical sense if one believes that more resources might be allocated in later years than currently planned, and that councils that had fixed their settlements would therefore lose out.  For this to stack up one must believe that government's net revenue spending will increase over the next three years and that at least some of that additional expenditure would be allocated to local government, rather than say to the NHS or to fund tax cuts.

7.     Neither of these appears likely.  Furthermore, one would also have to believe that additional resources allocated to local government would flow through to London for Brent to benefit by rejecting the fix.  As other changes to aspects of the overall funding system are tending to move resources away from London this would be an optimistic assumption.

8.     Of course, accepting the fix guarantees that RSG will continue to fall sharply until 2019/20.  However, the decision is about whether to guarantee future funding levels and accepting the fix does not imply agreement with the actual amount allocated.  It is merely a pragmatic way of managing a very challenging financial settlement by reducing future volatility and risk.

9.     Legally, Parliament cannot bind a future Parliament, and so DCLG retains the right to vary future settlements even for those councils that accept the fix.  However, officials have made it clear that they would be very reluctant to do so and it is reasonable to assume that the fix would be honoured in any but the most extreme economic circumstances.

10.  Within London officers know of no councils rejecting the opportunity to fix RSG.  Decision making has usually been managed at Cabinet.  A few councils have formally taken the decision at a council meeting or as a delegated decision.  Where the matter has been decided at Council officers understand that there has apparently been no significant debate, on the item.

Conrad Hall

Chief Finance Officer

Brent Council budget 'coup' an affront to democracy?

In a posting prior to Monday's Cabinet meeting LINK I drew attaention to the possible decision by the Cabinet to freeze the Council's Revenue Support Grant (RSG) until 2019/20 which would mean setting out an 'efficiency' plan for Council expenditure over the next four years to be submitted to the Department for Communities and Local Government. Due to the timing of Cabinet and Council and government deadlines the Officers' report recommended that these decisions, as well as one on Council borrowing, would not be made by Cabinet or Full Council but by one councillor and one officer in each case.

I wrote:

It is not only the decision in principle that has to be made by Butt and Downs but an 'efficiency plan' submitted that will dictate the level of savings (cuts, 'efficiencies' and income generation) over the next four years.

These are major decisions and I do not understand why the Cabinet cannot convene a special meeting before the deadline to consider Downs' proposal and efficiency plan. The wider Labour Group as well as the opposition seem to have been left out of the process completely but their hands will be tied for the next four years by these decisions.

Put simply the main parameters of the Council's budget decisions will not be made by the Cabinet, Labour Group or Full Council - and certainly not discussed by Labour Party members.  Within that of course there is also the setting of the level of Council Tax.

When these matters come up for debate over the next four years any decisions will have to conform to the efficiency plan.

Given the clear difficulty the Council is already having in delivering 'efficient' services as a result of funding cuts the 'efficiency' plan needs intense scrutiny.

Instead it will be compiled by  Carolyn Downs, Brent Council CEO and Muhammed Butt, Leader o the Coucnil,  and submitted by them before the government deadline. Additionally the Cabinet agreed to delegate the appointment of specialist fianncial advisers to Conrad Hall, the Brent Chief Finance Officer and Cllr Margaret McLennan, Deputy Leader.

The Cabinet Decision sheet records:

-->

RESOLVED: 2019/20 and option to fix RSG settlements

Cabinet noted the overall financial position and the risks inherent in it.

Cabinet noted the overall arguments for and against accepting a fixed settlement of its RSG until 2019/20, and that on balance the advice is in favour of accepting it.

Cabinet delegated to the Chief Executive and Leader authority to decide whether or not to accept the fixed RSG settlement.

Cabinet delegated to the Chief Executive and Leader authority to submit an efficiency plan to DCLG as part of any decision to accept a fixed RSG settlement.

Cabinet noted the position in particular in respect of business rates devolution and how this might progress, and that the chief finance officer will continue to respond to technical consultations as necessary.

Cabinet noted the progress in developing a financing programme for the investment strategy. 


Cabinet agreed to delegate procurement and appointment of specialist financial advisers to assist in the financing of the investment strategy to the Chief Finance Officer, in consultation with the Deputy Leader

In the light of these issues Cllr John Warren (Leader of Brent Conservative Group) has submitted a request calling for an Extraordinary Full Council meeting to discuss the Efficiency Plan before its submission.

Although his motivation may be to achieve further 'efficiencies' (cuts) and I would strongly disagree with that, the need for democratic decision making and accountability is essential and I think should be shared by Labour backbenchers.

This is Warren's  request:

Mr.Mayor,

I ask that the following item be included as " Any Other Urgent Business " at the meeting on Monday September 19th 2016


Full Council is asked to consider the Cabinet recommendations, noted below made at its meeting on 13 September 2016 in the report " Financial Position 2017/18- 2019/20 and option to fix RSG settlement " by holding an Extraordinary Council Meeting on Thursday 13 October 2016.

       2.3. That Cabinet delegates to the Chief Executive and Leader authority to decide whether or not to accept the fixed RSG settlement.

       2.4.That Cabinet delegates to the Chief Executive and Leader authority to submit an efficiency plan to DCLG as part of any decision to accept a fixed RSG settlement.

REASON FOR REQUEST.....

Every year Full Council considers the annual budget, in detail ,at a special meeting called for  that purpose.

I believe that the Cabinet recommendations, detailed above, are an important part of this budget process .

I believe that Full Council should consider the issue of fixing RSG up until 2019/20,along with consideration of the efficiency plan attached to this deal.

The deadline for submission to DCLG is 14 October 2016  - hence the meeting on the 13 October 2016 will enable Full Council to debate fully these issues with up - to - date information.
      

 
-->

Cuts to go ahead at Brent Council despite slight respite and worse to come

The First Reading of the Budget will take place on Monday at Full Council.  The report details a wider measure of uncertainty that usual regarding the impact of government legislation as well as specific figures from government. The report suggests that things should be clearer in time for the January 2016 Cabinet Meeting. The budget is due to be approved on February 22nd 2016.

Today's suggestions that the Chancellor in his Autumn Statement may allow councils to increase Council Tax by 2% to relieve the pressure on adult care provision is a further complication not covered by the report.

The overall forecast of council income is illustrated by this table from the report:

RSG = Revenue Support Grant. Money paid directly to local government from central government
BRTU= Business Rates Top Up again from central government, but the system is changing, ostensibly to allow local councils to retain more but resulting in a loss of income to local councils
NDR=Non Domestic Rates, affected by an increase in appeals against increases in ratable value
Council Tax Base - this has improved through increase in the number of properties in the borough, a decrease in the value of council tax discounts to residents and improvements in collection rates (although these have deteriorated again recently). These figures will change if the Council Tax is increased by 2%
NBH= New Homes Bonus is paid to councils for completed homes but this year it was top sliced in London boroughs to pay for Local Enterprise Panel projects.

The long term funding issue remains dire with a continuing decline in the Revenue Support Grant putting the very future of local government in jeopardy.

The July (red) line reflects measures taken in the Conservative Government's July budget but as can be seen the reduction accelerates again in 2017-18.

The report states:

 Probably the most likely scenario is that the pace of general fund financing reductions in 2016/17 will be less steep than previously assumed, meaning that the council can set a balanced budget for that year without the need to agree additional savings proposals. However, thereafter the scale of reductions is likely to accelerate, and so any gains in 2016/17 should be regarded as strictly temporary. 


'Additional savings' means in addition to the substantial cuts for 2016-17 agreed last year which in summary are:

The full list can be found in the PDF at the end of this posting.

The report does suggest that further savings be identified for 2017-18 on a contingency basis:

As set out in the introduction to this report, there are more and greater uncertainties in the financial planning than would normally be the case at this point in the budget cycle. Until at least the major uncertainties have been resolved it would be sensible and prudent to plan to identify more savings for 2017/18 and beyond than may actually be required, to ensure that the council has well developed options available to it if some of the worst-case estimates come to pass.