Budgets: it all adds up

Setting the budget for Peterborough City Council is no mean feat. Cuts in funding from central government, unprecedented demand on social services and a rapidly growing city make the task almost impossible. Nevertheless, the budget for 2019/20 has been balanced and services remain intact. We examine the council’s budget from four angles, starting with the man tasked with overseeing the budget, following on with an alternative proposal, and including with comments on the contribution of local businesses and police funding

As Cabinet Member for Resources, Councillor David Seaton has overall responsibility for the council’s budget, including ensuring that there’s enough income to fund it! It’s a tricky job, so how does he manage it?

You’ve had to find additional savings to the council’s budget for a couple of years now. It must be hard, and presumably it only gets harder?
It does get harder with each passing year, but we have a good track record of delivering balanced budgets against a backdrop of ever-reducing government funding. Our main government grant has been cut by more than 80% since 2013/14 – from £55m to just £10m. That’s a reduction of £229 per person. Despite the reduction in funding and the level of savings we have had to make, at a time of ever-increasing demand, we have still managed to maintain services and even improve them. For example, new self-serve technology means libraries are now open for longer.

What are the main ways in which you’ve made these savings, and how have you increased income at the same time?
By being more efficient and commercial in our approach. For example, sharing senior staff and working closely with the county council. One team with joint systems and processes is more efficient than two. Our investment in solar on houses has already delivered £2m. However, we are looking to be more commercial in all areas, including how we buy services and manage our contracts.

Drawing up plans to balance this year’s budget has proved tough enough, but what about 2020/21 and beyond? You admit it only gets harder – perhaps ‘impossible’ is a better word!
I set out a broad range of activity to Full Council in March. Shared services with the county council can deliver more and I want us to work with other councils too. We need to focus on those services that are most important to residents and the level of service they expect. We need to retain and develop good staff and reduce our use of agency staff. All areas of the council are under review: our assets and resources to ensure the best return, our commissioning and procurement processes, and where we need to invest to add value or to save. Are we getting the best level of service and can it be delivered more efficiently? A key area is demand management – so how we work better with our communities and fully integrate with health services and other partners. And then there’s our capital programme. We’re looking closely at whether it can be delivered when planned and for opportunities to deliver better value.

The Council recently consulted on the third and final tranche of savings for this year’s budget. What was the feedback?
It was mostly supportive. I know some were concerned when we decided we couldn’t continue running almost-empty buses, but a cross-party group found a way to stop that with minimal impact. I don’t like increasing council tax – it went up by an average of just less than 75p per week, roughly the cost of two pints of milk – but I think residents realise we have kept it as low as possible. There were no alternative proposals put to Full Council proposing changes, which I take as members not seeing any specific items they opposed.

To help balance this year’s budget you plan to use £3million of council reserves. Doesn’t dipping into reserves like this compromise the Council’s future financial security?
There is still a base reserve of £6m and total reserves of £20m, so it will not affect our financial security. Indeed, the £3m is part of a specific reserve built up, through early delivery of savings, for use during this time. We have never had a policy of building up large reserves for the sake of it as effectively that is always done by taxing residents more.

Council tax has just gone up 3%, well above inflation. Can you honestly say that Peterborough City Council still offers good value to council taxpayers?
Peterborough has the eighth lowest council tax of the 56 unitary authorities, and our council tax bill is £383 lower than the highest unitary authority bill in England. This year’s increase is consistent with many other councils in our region, with some opting for a higher increase. Peterborough residents get good value for money because the Council is being more innovative in the way it provides services while operating more like a business to generate income. It’s meant we haven’t had to close any community assets such as libraries or community centres, as a time when more than 500 centres have closed nationally. Our 48 council-owned community facilities have been successfully run by voluntary organisations for many years. We are now going one step further by transferring full responsibility for the management and running of community centres to community organisations under a Community Asset Transfer Scheme. This will save the council considerable running costs, so we can keep vital services like parks and libraries open. The alternative would be to close them, something we’ve strived to avoid.

The Government’s Fair Funding Review is currently underway. It will set a new baseline for how local authorities are funded by delivering an up-to-date assessment of their relative needs and resources. What are your hopes for this process?
The review is crucial. We are the fourth fastest growing city, delivering jobs and housing with a 1.4% unemployment rate. Most of our housing is in the lowest tax bands. If we were ‘average’ we would have £26m more and our existing efficiency programme would have worked. We aren’t because we have very low tax levels. The Government needs to recognise that and the result must be favourable.

The council is increasingly reliant on its commercial enterprises and partnerships. Is this changing the council’s outlook and are there other advantages, aside from the additional income, to moving further down this road?
We have always had that focus but it has become more important as money gets tighter. In February Cabinet approved the council’s first commercial strategy which sets out how we’ll further generate income by selling our services, investing and through other means. It’s a really important strategy as without generating the income we do, we couldn’t deliver a balanced budget and provide the services residents rely on. Every year we make £72m through investments, sharing of services, fees and charges and other means. I’m really proud of that. For example, we generate £2.7m by selling the energy produced by our energy from waste plant, we receive £6.1m in rent from our properties and our planning and trading standards department bring in £4m annually from work with other councils. Our commercial strategy looks to further this good work and generate even more income. With every opportunity we will always weigh up the financial and social value.

What are the main threats to council budgets? Is there flexibility to cope with any unexpected negative impacts?
The biggest challenge is rising demand – more vulnerable adults needing support, more children, more elderly people. In the past five years the fastest growing financial pressure has come from the unprecedented rise in homeless households. Peterborough is not alone in this, with similar increases being seen across the country. Prior to 2016/17 the number of households coming to the council for assistance because they were homeless or threatened with homelessness was relatively consistent with around 1,100 households presenting each year. In 2016/17 that shot up to 1,586 because of a number of factors outside of our control, such as rent increases and the reluctance of landlords to accept tenants on benefits. Last year 1,504 households sought assistance. We have to provide temporary accommodation and long-term housing for those we have a duty to, and of course that comes at a massive cost to us. This is just one example of the rising demand for services that we are experiencing. Overall, we constantly monitor what we see as the main risks and, yes, we have reserves to give flexibility in responding. But it’s vital we set a sustainable budget and I’ve often said to colleagues that we can’t rely on reserves.

You mentioned that Peterborough is the fourth fastest growing city in the country. Are there any advantages to this?
There is extra income from business rates and council tax but with that comes extra responsibilities and demand for services. We receive a bonus from Government for building extra houses, which has been helpful but hasn’t offset the cuts from our Government grant.

The way the council is funded has undergone a lot of change. Where do you see the council and the health of its budget a few years down the line?
Many councils work to a yearly budget. We have always sought to look longer term. In five years’ time I’m confident we will have a sustainable budget and, with the opportunities the Combined Authority gives us, be able to continue to grow Peterborough in a positive way with better jobs and prosperity. The new university will be transformative and will improve our opportunities and culture. Peterborough is a fantastic city with an even better future.

The business view

Tom Hennessy, Chief Executive of Opportunity Peterborough, explains the value of business to council coffers.

“Small businesses are vital to our economy. Peterborough has extremely high start-up rates and if we want more independent retailers on the high street we should make it as easy as possible for them to do business. Various business rates relief schemes are available and it’s vital that small businesses in particular are aware and are taking advantage of them. As a company owned by Peterborough City Council, Opportunity Peterborough offers free advice and support to companies of all sizes and sectors to aid their growth and development, whether they need access to finance, support for export or import, want to improve productivity or find new premises. We also promote Peterborough to attract more businesses to the city; those businesses create more jobs for the city’s residents and contribute to a bigger business rates pot to help pay for services.”

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