Thursday, 26 November 2015

Camden's cuts challenge - Post 12 - Spending cuts and Camden’s services

Cuts to council funding announced by the government yesterday have left local with huge budget pressures – according to the Institute for Fiscal Studies, the longest period of cuts since the Second World War

Since 2010 like-for-like funding from Government has been cut by 34%. By 2017 this will have been cut in half.  By 2018 the budget reductions – a total of £168 million – will be the equivalent to over £3,500 of spending per household in the borough.

We are currently analysing the full detail of the spending review. What seems clear is that local government will be expected to continue to cut budgets significantly, and that further cuts will be required beyond the implementation of our current 3 year financial strategy in 2017/18, and as expected core grant will disappear completely by 2019/20.  There is also likely to be some very bad news for per-pupil funding for schools.

A further complication is remaining uncertainty about which new burdens the government will transfer, or what existing funding it will substitute, to achieve 100% business rates retention across local government by the end of the parliament. The exact position for Camden for next year will not be known until the Local Government Finance Settlement next month.

We should be clear that this long era of cuts is the result of a Tory programme which slashed revenue and capital spending when the economy really needed it and failed to create balanced and sustainable growth.  Today the problems caused by the banking crisis and subsequent recession are still with us with lower wages and higher cost of living for most, weak growth and further spending cuts to local services.  Hidden behind this, of course, is also a drive to create a smaller state with only the slightest safety net.  

As the Shadow Chancellor argued, the UK economy should be doing better but because it still isn’t our public services continue to suffer. 

The Camden ‘Graph of Doom’
Camden’s ‘graph of doom’ is an illustration future spending if we don’t make big changes to as well as cuts.  It predicts that Camden will have no money for anything other than street cleaning and recycling; adult social care and safeguarding children by 2019 – two years earlier than I estimated this time last year. 

Cuts will put immediate pressure on both discretionary services (swimming pools, youth work, voluntary sector, parks and street cleaning, but are not required by law) and statutory services (like children’s safeguarding and adult social care) alike.  However, because funding for statutory services must come first, across these discretionary services will get hit hardest.

Camden’s Labour councillors will avoid closures wherever we can but the reality is that if we are to protect community services, every service will have to change.  This may mean the introduction of more charges, more technology and a change in the way we work with other public services and the voluntary sector.

Our Plan
Councillors across London are legally required to set balanced budgets, but we also need to campaign and speak out loudly against yet more damaging Tory government cuts. That is what was said last week by, among others, the Shadow Chancellor, John McDonnell MP, and Sir Steve Bullock, Mayor of the London Borough of Lewisham.  We’ve joined London Labour councillors in a new ‘Red Lines’ campaign launched just this week.

Here in Camden we can't sit passively by and let these cuts work themselves out.  Just reducing budgets by a set percentage across the board (‘salami-slicing’) or setting budgets year-by-year is not an effective way to meet these unprecedented cuts.   

Camden Labour set a three-year strategic approach so we can make better and more informed choices for the long-term.  Four Investment Tests guide our decision-making to ensure services still tackle inequality and money is spent on the things which have the greatest impact.

The new outcomes-based budget approach has allowed the Council to free up some resources for reinvestment and change the way we do things.  This includes:

·       Being a London Living wage employer for all staff, including care contracts by 2017.

Before considering any cuts, we set out to make every pound work as hard as it can.  Technology - through open IT and data analytics, will be a component in over 85% of our initiatives and Camden is already seen as leading the way nationally.

The senior management pay bill has been reduced by over 20% since 2010 and the numbers of middle managers cut by 200.  

In total 1500 posts will go from the council to 2017 and we regularly talk to our trade unions about changes.  We are reducing use of agency workers and cutting the cost of our support services, including finance, human resources, information technology and property.  Increasingly the council will share services with other boroughs.  

New initiatives to balance the books include: 

·       A major restructure of the council away from historic departments (housing, environment etc) into 3 departments focused on people, places and performance.

·       Further income generation from public buildings, including new commercial office space, renting roofs to broadband companies and more income from events in public parks.

·       Preparing for business rate funding – all central grants will be replaced by business rates collection by 2020:  Camden needs a long-term plan to promote and retain businesses, especially (but not exclusively) in the tech and med-tech sectors.

Investment in infrastructure
Public services also face a very large challenge in its capital programme needed for schools, council housing and public infrastructure.

Currently only 6% of capital need for homes, schools, roads and public buildings is funded by the Government.  We need to use the council’s assets to support more investment.  The Community Investment Programme (CIP) is our plan to invest in things the government now won’t. This is mainly self-funded by selling or developing properties that are out of date, under-used or expensive to maintain and is guided by principles we set at the start.  So far: 

·       53 primary and secondary schools have received repairs and investment.  Money was given on the understanding that schools would not convert to academy status and none have done so.

·       The council is building 1100 council homes and repairing a further 13,000.  No council home will be voluntarily sold by the council under this programme.   Camden is the only authority in London to build more homes than it lost through right-to-buy.

·       Camden has sold old council offices to raise money for reinvestment.  On sites of old offices, like Camden Road and West End Lane we seek 50% affordable housing from developers as well as a receipt to reinvest.

We also know that buildings can only be sold once, so it is important we generate enough to fund the programme and make the investment count.  Because we will rely entirely on business rates from 2020, Camden will also have to think about how it is able to sustain business space in the face of hostile government planning policy and grow more – and this may mean a change from our big focus on building more council housing.

As Labour nationally develops its alternative economic strategy for long-term growth, it is important that where Labour is in power it has a plan based on investment, jobs and apprenticeships.

In Camden it is important that we continue to set budgets that invest money where it can make the most difference.

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