Calderdale Council Financial Update
Part 1 — The Story so far
Calderdale Council is in a very poor financial situation at the moment. However, it is also important to note that many of these financial problems were pre-existing to the current COVID-19 pandemic.
If we look at this year’s budget papers we can see the budget passed by the administration was already planning to run at a deficit. This deficit was due to increase in the years ahead as savings had not been identified.
For the years:
2020/21 a budget deficit of -£679,908
For 2021/22 a budget deficit of -£2,803,808
For 2022/23 a budget deficit of £-3,566,576
Despite knowing that many savings were required just -£745,000 worth were identified by the Labour group for this financial year as the table below shows.
Over years of a Labour administration, this is how our Council has been run. The savings being set have been lower than the drop in funding cuts from Government have required. This has resulted in deficits being run and our reserves being run down.
In fairness to the Labour administration, it is also worth saying these savings have been huge. They have gone way beyond just cutting the fat and waste from Local Government, and are now cutting to the bone of services. I don’t deny it has been a very challenging situation that they have faced, and not one I would have relished if I had been the Leader of the Council.
Sadly though the impact of not making savings quickly and to the level required means that our reserves have been dropping year on year. Putting off tough financial situations doesn’t make them go away, it just makes them worst.
Our current reserves are at a level below the average for most Metropolitan Borough Councils. This context is important because next, we are going to look at the COVID-19 situation. If you want to learn more about this you can look at CIPFA Financial Resilience Index. We score very badly on our levels of reserves and changes in reserves. To put it bluntly, the cupboard is bare.
Part 2 — The Pandemic Cuts — We get told there won’t be an emergency budget or package of cuts.
At the Council meeting on 2nd I asked the following question:
“A combination of local government cuts, the failure of this administration to meet it’s own savings targets that it planned in its budgets and the cost of dealing with the COVID-19 pandemic has left the Council in a very precautious situation. Will you as Leader of the Council to commit to leading a full public consultation on any drastic measures you have to make as part of the Medium Term Finacial Strategy.”
In the reply that I got from the Cllr Leader Tim Swift we were informed
That COVID-19 has lead to a lot of additional financial pressures. Both from additional direct expenditure and loss of income from things like parking and gyms.
However, we were also informed that the cabinet had agreed on a financial recovery plan that would contain the existing costs of COVID-19 within Government funding.
“In the current year, the head of finance is advising that with the action being taken by directors on existing savings plans and the anticipated Government compensation for lost income an emergency budget or package of savings reductions may be avoided.”
Given the Leader of the Council told us this it was not unreasonable to think things would be tough and we would have to find savings for next year, but this would be done as part of the normal democratic budget setting process.
Part 3 — The pandemic cuts — A package of cuts is sprung upon us
Less than a month later the papers for the Council’s cabinet meeting on 5th October are published. These can be read here. Item 7 is a paper entitled “The Future Council Delivery Phase 1”.
This paper did not appear on the Cabinet’s Key Decision list. This is a legal requirement for any key decision. Details of this regulation can be found in the ‘ The Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012’.
It is because this package of cuts was not announced as a key decision I called them unlawful and asked for the paper to be withdrawn. You can read a report about this in the Halifax Courier. It is worth noting following my complaint ‘Phase 2 of the ‘The Future Council Deliver’ has now appeared as a key decision for the November cabinet. People can draw their own conclusions as to why this happened!
So after being told there would not be a package of cuts, we found out about a package of cuts. With one week’s notice. The Key Decision issue might seem a little obtuse, but the regulation exists in order that everyone has enough notice a decision is going to be made. That’s an important part of the democratic process — that those in charge have to say what key decisions they are planning to make.
Upon reading this paper it told a rather different story than what the Leader of the Council had said in September. Now there were savings of between £8M — £20M that were to be required. This gets confusing as the Leader is stating £15M in the press whereas some Labour Councillors are stating £20M on social media. Anyway, they are now saying there does need to be a package of cuts.
6.1 The latest estimate is that the additional cost to the Council in the current year is likely to be around £31.6m with around £16.7m of additional Government funding to cover this i.e. a shortfall of £14.9m. Around £10.6m of this relates to potential losses on council tax and business rates income which the Government has said that it will allow local authorities to recover over the next three years. There is therefore currently an in year shortfall of around £4.3m. It is anticipated that this will reduce through the receipt of additional CCG contributions towards the additional social care costs associated with the discharge of people from hospital and also the Government income compensation scheme.
6.2 The reliance on short term funding is however not sustainable and more permanent solutions need to be put in place for existing budget pressures and unachievable savings in advance of the budget process for 2021/22. Our initial estimate of the potential impact on next year’s budget position is that the Council may be faced with having to find on-going savings of around £8m in a best case scenario and up to £20m in the worst case. This will increase if existing budget pressures are not addressed and by any unfunded shortfall in relation to the coronavirus, for example, the deficit on Council Tax and Business Rates income in the current year.
The table of cuts comes to nearly £2m. It includes proposals to move to three-weekly bin collections and fortnightly recycling collections. Also the closure of multiple libraries and the reduction of waste recycling centres to a statutory level. As an environmentalist, I find the cuts to recycling collections and centres very alarming. Closing Libraries I also think demonstrates a lack of imagination as to how these buildings could be used in a post COVID world. This is certainly not a ‘New Green Deal’ or ‘Building Back Better’.
In response to these proposals, we have launched a petition opposing the changes in waste collections. This can be signed here.
Part 4 — What is the Liberal alternative?
Cleary the finacial situation the Council finds itself in is dire. Often Liberal Democrats are accused of having introduced the era of austerity. I think this is rather unfair given all political parties went into the 2010 general election explaining cuts would be required.
However itis true there were cuts during the coaliton period of 2010–15 and it is my personal view some of them went too far. When we look at the actual level of cuts however they were at a level below what Labour had promised in their 2010 manifesto.
My view on this is that once the sovereign debt crisis and the Nation’s finances had got under control, there was no longer a need for further spending cuts or reductions.
Both recent Liberal Democrat and Labour manifestos included commitements to increase funding for Local Government. But we are stuck with a Conservative Government. Now with additional costs of the pandemic, and still the risk of a no deal Brexit. It doesn’t seem likely the funding situation from Governemnt is going to improve.
Our Local Stance
Locally as a party, the Liberal Democrats have made suggestions for savings and also important new ways of raising revenue. We are often accused of just being oppositional but we can cleary evidence examples of savings ideas we have put forward as you can see below:
Cllr Tim Swift has with days to go before his planned cuts asked to make our own suggestions. He has done this via a statement to the press rather than an email. So in response, we repeat the following ideas:
- A system for voluntary extra payments of Council Tax (this would be for specific projects such as helping the homeless or tree planting).
- A Council Lottery Scheme for community projects. (Portsmouth Council does this and raises money for local projects). This idea was actually adopted by the Cabinet of the Council but then just never acted upon.
- Crowdfunding for community projects. — This would be a Council-backed website where people could chip in for local projects and improvements to their area.
- The idea of creating more parish and Town Councils that can raise their own precepts and take over some local services (such as management of parks and green spaces).
These ideas alone would not be able to plug the huge funding crisis we are now facing but they would help the situation. Until they are tried out with a genuine attempt to try and make them work we reject Labour’s argument that we are not putting forward our own constructive savings suggestions.
We call on Cllr Tim Swift to withdraw his cabinet paper of planned cuts. It contradicts his previous statement that a package of cuts would not be needed. It breaks the Council’s constitution and legal regulations as it was not published as a key decision. It is undemocratic as no opposition Councillor will even have the opportunity to vote on them.
We call on him instead to establish a genuine cross-party group to examine this problem. Then we could move forward with ideas for savings provided from a public consultation, opposition political groups and all residents of Calderdale.
