County Budget 2014 - A Guide to Undeliverable Populist Alternatives.

The next Full Council meeting at Cambridgeshire County Council is the one where we try and agree an annual budget. It is our toughest yet - with savings of £38m to find for next year, despite a growing number of residents and an ageing population (which means ever increasing pressure on Adult Social care). Every year we have a bit of a moan about the lack of meaningful alternative and get accused of cheap political point scoring when we Conservatives react to what we see as undeliverable populist alternatives. So, I thought I would get my rebuttal in early this year by way of a layman's guide to highlight the sort of things we would expect a purely populist opposition to say and to explain why they are purely populist ideas.

I will be fair before I start we do have some idea of what to expect because we have had a much more open process this year. But they have all changeds ince wew ere given sight of them and not all political parties have provided detail around what they are proposing - and I suspect for good reason. Some have given us ideas that we will accommodate if we can. But others won't.

What I would ask you, dear reader, to do is use this as a reference when our opposition parties put forward their alternatives. Ask yourself the question, are they offering genuine alternatives or are they just saying things that sound attractive to you the voter but which don't stack up under the sort of analysis that has been made available to them?

1. We are cutting because those nasty Conservative Councillors have mismanaged in previous years. There is absolutely no evidence to back this up. The best counter evidence to this is the independent peer challenge that took place a few months ago. That described Cambridgeshire County Council as "Premier League" and identified that our Senior Management structure was "very, very lean". Bear in mind this year's £38m savings target sits on top of huge reductions in previous years. If we had not taken ambitious preventative approaches to Children's Services and Adult Social Care, many of the cuts we are being forced to make this year would have been needed a few years ago and we would be cutting even deeper and harder this year. Just one example is that we have worked hard to intervene earlier with families to reduce the number of children going into care, bucking the National trend and saving money. There are numerous other examples - we are an efficient well-run Council. Data produced by the Local Government Association show that whilst we are facing enormous financial challenges at the moment, the decisions we have made in the past few years around Council Tax and economic development mean that we are better positioned for the future.

2. We can sell off assets in order to avoid cuts in services. Apart from the question about whether iwe would be allowed to do this, there are huge consequences if we actually do it. Selling off Shire Hall is the best example of this sort of proposal. If we sell Shire Hall it will generate a one off sum of up to £8.5m (in real terms it is likely to be much less than this because our IT is in a part of the building and it would be too expensive to move it out, so we would have to take this off the sale value and account for the fact that not having the whole facility for sale reduces the attractiveness of the remainder). Now set that aside. If we generate, say £7m from the sale, of Shire Hall. We could, arguably, use that to offset from the £38m savings target. Great, except once we have done that we will have lost a £7m asset and, in a year's time, because we no longer have that £7m one-off cash injection available, we would have to find that saving anyway - we would be simply delaying a tough decision and reducing our asset base - very bad economics.
Selling off the family silver would provide short term benefit and would just delay difficult decisions not prevent them.

Of course, there is an argument that it would make savings by reducing running costs. That is correct. But the aim of the Conservative group is to consolidate and rationalise our buildings estate, but in a way that generates ongoing income for the County Council. Our current ambition is to move our staff out of Castle Court into Shire Hall and elsewhere. Castle Court is a perfect building to let out as office space, or some such alternative, so our aim is to turn this into something that brings money into the council year-on-year - looking after the medium to long term interests of the Council Tax payer in a far more effective way than just making a very minimal revenue saving.

3. We need to reduce staff mileage. It is true that we spend a huge amount of money on mileage. It is easy to say we need to reduce this by increasing the amount of telephone and video conferencing etc. etc. I can see how well that message would come across. However, for the last few years we have been doing this very thing and, in fact, there are already savings built into our budget going forwards. The amount of telephone conferencing we are doing is increasing year on year. For example, I now often use telephone conferencing in my office so that cabinet members can dial in to meetings as an alternative to driving in - that has been used on a number of occasions over the past year.

Now let's look at our biggest functions as a Council. Arguably one of the most important things we do is Children's Social Care. Over recent years the drive has been to try and make sure our excellent social workers spend more time in contact with the families they are dealing with. We have an ageing population, which means we have more older people needing care assessments - all tasks that create an increasing need for our staff to spend time meeting families. We have reduced mileage despite those pressures and further savings are already built into the draft budget for next year - by increasing video and telephone conferencing, changing policies around the use of pool cars etc. etc.

The facts underlying this are that between 2009/2010 and 2012/2013 we reduced our spend on staff mileage by £1.3m despite increasing the rate we are paying by 5p per mile.

It is easy and populist to say "we can reduce mileage costs" - the hard bit is proving how additional savings can be made when reductions are happening anyway. The likely outcome if such a saving was built into the budget is that it would become an unrealised saving, the result of which would mean we have to make savings in-year in a way that is far less well planned. Of course, if we can drive down mileage costs further than expected, this has a positive impact in the middle of the year - and this has happened in previous years. But, the argument that there are hundreds of thousands to save instantly on this area of the budget is fatuous - so if opposition proposals talk of reducing mileage, remember they are on top of savings already built into the budget and are in the face of increasing need for front line staff to travel to meet increasing demand.

4. We need to reduce staff costs/cut senior management pay/not allow pay rises. There are a number of arguments under this bracket which are traditionally used. The first is to substantiate the myth that there are millions to be saved from slashing senior management pay. It is not true - senior management pay, especially that of our very senior staff is a tiny proportion of our overall pay. That doesn't mean we shouldn't try and achieve savings from senior management costs. Indeed we have done that significantly in recent years. But, the balance has to be got right. It is our senior staff that have, for example, led on the prevention strategy for Adult and Children's Social Care that is saving us millions; the economic development work our senior managers are doing is what will generate the future income from Business Rates retention that will put us on a more sound financial footing in future. It is also true that over the last year or so, two of our most respected senior staff have moved to the private sector.

Secondly, we are already working on strategies to drive down staff costs - these are still being finished off and I owe it to our staff not to publish these before the consultation is completed. But, some of this revolves around reducing staff mileage and cascading some changes that have already saved money when they were put in place for our most senior staff.

Of course, another option could be just to deny our staff an annual pay rise. At the start of the period of austerity we did this, alongside other Councils. But any suggestion that you could just keep doing this is simply mean spirited and would potentially lead to us struggling to recruit and retain in some areas of the Council - we have had significant issues with hiring and keeping social workers in the past, so this is a real issue we have to consider.

Just a reminder, our most junior staff got a 1% pay rise this year, for our senior staff this was tied at just 0.5% - significantly less than inflation.

Once again, reducing pay rises is an easy opposition statement to make, but going too far has significant implications.

5. Our reserves are too high/our reserves are about right. No reasonable and informed analysis of Cambridgeshire County Council's financial position would come to this conclusion - but it is a statement that is always welcomed by the public - and it is true that councils have been criticised by Government Ministers for having reserves that are too high. However, out of 336 local authorities in England only 5 have lower levels of reserves than Cambridgeshire. Our recent peer challenge criticised us for this.

The question that follows on from this is why are the levels such an important issue? Think about our current situation where we are having to provide services for a growing number of people - services we are required to provide by law. Our way of trying to deal with that is through prevention. But what happens if our preventative solutions don't provide the level of results we want? What happens if we get a number of large families where we need to bring children into care? The answer is that we would have to use our reserves.

Recent figures for all of the Councils in the East of England ranked us 50th out of 52 for the level of our reserves - citing the fact that if we had a financial problem we could only survive for just over half a month if we had to rely on our reserves - at a time when less funding means we are taking more risk. My own view is that any of our Councillors who publicly claims that our reserves are OK is doing so because its an easy thing to say for a few votes, not because they believe it. All of our Councillors are very, very aware of the real situation - if they would risk our ability to support vulnerable people in a crisis to gain a few votes, then you should judge them for it.

Let me be plain, I wouldn't say this if we were not at the point where we are - with independent reports saying our reserves are too low backing up the straight fact that there are only five local authorities with lower comparative levels of reserves.

6. We shouldn't raise Council Tax. I would love to say that we can afford to freeze Council Tax. But the reality of our situation suggests otherwise. One aspect of this is that we could take a 1% grant off Government if we choose to freeze Council Tax locally. As with the items above, the devil is often in the detail. If we take that grant, it is only guaranteed for two years. If you doubt me on this, this is the text of an email from DCLG earlier this month about this "freeze grant":

"The grant for the 2014-15 freeze will be paid to participating authorities in the financial years 2014-15 and 2015-16 – so if an authority freezes in 2014-15, it will also receive a grant in 2015-16 in respect of the freeze decision taken in 2014-15 (council tax decisions subsequently taken by authorities in respect of 2015-16 will fall under the terms of a separate freeze 2015-16 scheme)"

What this means is that if we take the Government grant we could lose it in two years - a year when we potentially face our biggest challenge ever in terms of producing a balanced budget. It would mean an even larger Council Tax increase then, or even bigger cuts. Bear in mind that each 1% increase in Council Tax is worth £2.26m to Cambridgeshire.

Every year as a County Council we do a resident survey about Council Tax - one that is statistically valid - this year it showed that residents would accept a Council Tax increase in order to minimise the impact on services. That is the likely decision for May - but before a final decision is made by any party, we need more information from Government. Final recommendations will come once we have that information, but if a rise does come, it will be lower than inflation.

If you want to see where Cambridgeshire's Council Tax level is compared to other County Councils, you can find that here:

http://www.cambridgeshire.gov.uk/council/finance/tax/bandD.htm

Bear in mind that, although our Council Tax is average, going forwards there are only two local authorities in that chart that higher savings targets than Cambridgeshire.


The reason I have put this article here is to stimulate some discussion in the run up to setting the budget in February. This article summarises the sorts of arguments we have faced in previous years. Arguments which, in my view, have been about populism rather than about what is deliverable. This year, to reflect the fact that the Council is in no overall control, we have opened up the budget consultation process, so our opposition Leaders are much, much more aware of the facts and the detail around our financial position. I hope this leads to better, more imaginative alternative proposals. At the very least if we do see the issues highlighted above prevalent in those budgets, given the fact that the process has been more open, The public deserve detailed proposals about how they will be achieved, rather than just brief populist statements. I hope this blog will provide a means by which you can measure those alternatives.

I will always make sure that sensible alternative proposals are considered - in fact there are areas where we have done this already.

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