Agenda item

To receive an update on the overall value of budget reductions necessary over the next two financial years and consider options that have been identified from service areas to address the budget gap across both years

Consideration was given to a report which provided an update on the overall value of budget reductions necessary over the next two financial years and presented options that had been identified from service areas to significantly address the budget gap across both years.

Members noted that consultation with the public, key partners, trade unions and staff would formally commence on 26 October and close on 30 November 2018. The outcomes from the consultation would be considered when finalising the Budget. It was further reported that the Provisional Local Government Finance Settlement was expected in mid-December 2018, with the Final Settlement expected in early February 2019. This would confirm the Government funding to be received and alongside feedback from the consultation and Overview and Scrutiny Management Board, was planned to enable the budget to be finalised.

In terms of governance, Members noted that the final Budget and Council Tax report would be considered by Cabinet on 18 February 2019 and the Cabinet’s recommendations would be referred to Council on 27 February 2019 for approval.

The Chair welcomed the Leader of the Council and Chief Executive to the meeting and invited them to deliver a presentation to the set the scene for the budget setting process for the 2019/20 and 2020/21 financial years. A copy of the presentation is appended these minutes.

The Leader of the Council reflected on the priorities of the Council which had been set out three years earlier and on the significant shift away from local government being funded from the Revenue Support Grant from government. For nine years, the Government had enforced a period of austerity on public services and the Ministry of Housing, Communities and Local Government (MHCLG) had been the hardest hit in government, with local government being the hardest hit part of the public sector. By way of illustration of the profound shift in funding of local government, the Leader explained that the grant from government in 2013/14 had been £84.3m, in the current financial year it had been £21m and in the 2019/20 financial year it was expected to be £15m. That represented an 82% reduction in funding and it was expected that the Revenue Support Grant would be phased out altogether.  These reductions in funding had occurred at the same time as the outturn spend on Children and Young People’s Services had increased by 150%.

Continuing, the Chief Executive explained that pressure around social care was being felt right across the country, especially by metropolitan councils. Nationally, local authorities were overspent on social care by more than £800m. The Local Government Association had calculated a funding gap of £3.6b across the country. With uncertainty around the future of local government funding, the Chief Executive indicated that she was not able to provide any further information on the funding regime beyond the current period. Whilst there had recently been funding for winter pressures in Adult Social Care, the announcements had been in October and the money does not follow as quickly and this was inhibiting the ability of services to deliver in the long term.

However, the Council was clear in respect of its strategic direction and what services it would continue to provide. In terms of place shaping, the Council was clear about what it needed and wanted to do to drive inclusive growth. The reality was clear that it would not be enough to manage reductions in finance, as the gap was too big to bridge. The Council had made a commitment to neighbourhood working, customer Services was a priority and writ large throughout the budget proposals.

The Leader of the Council reminded Members that Rotherham was fastest growing borough economy in the region and in the top ten nationally. There remained work to do on breaking the cycle of low paid work and some of the higher skills and paid roles being created in the borough emphasised that changes were being made. The number of businesses in the borough had grown by more than 800, creating 4000 more jobs. There were projects around town centre regeneration and University Centre Rotherham to tackle the historic low skills base.

Referring back to the future funding model, the Leader acknowledged that the Council had an issue in respect of business rates, as the borough was dependent on a small number of big employers. However, there was work to do and with an assumed increase of 700 Band D properties, that would generate additional council tax receipts. Reference was made to a number of assumptions in respect of housing growth and government policy. Returning to neighbourhoods and partnership working, the Leader reminded Members that they were moving from world where Council was the deliverer of services to an environment where it was shaping the borough by working with the public and the voluntary sector economy. He noted that strong arrangements meant that a strong financial benefit would be realised and cited examples of the introduction of seven day social care practice, changes to the falls service saving £3.6m per year. With neighbourhood working, alongside member led activity, more joined up activity was being undertaken with the police which meant they and the Council were getting on top of problems before they happened, which in turn had saved money down the line.

Referring to the comments in respect of economic and housing growth, Members queried whether the Council was maximising its potential for Section 106 monies from new developments. In response, the Leader indicated that there was a process in place, but Section 106 was less important following the introduction of the Community Infrastructure Levy. He did not think there was any reason to be troubled presently, but Members would want to understand how those CIL contributions began to add up and what that would mean.

Members queried which council budget paid for legacy costs related to child sexual exploitation. In response, the Leader indicated that the information presented to Members was designed to show how services are being rebuilt and made fit for purpose. The Strategic Director of Finance and Customer Services indicated that financial values associated with legacy costs would not be disclosed in public and that the Council was working with the Information Commissioner’s Office to establish what can be disclosed. All costs had been through audited accounts and the Strategic Director monitored the figures on a monthly basis and at year end, and indicated that she was comfortable with what the Council had accounted for.

Members queried what contingencies or options were available if the expected savings could not be made, given the reliance on a number of big projects and reconfigurations. The Leader confirmed that there was not a lot of flexibility with only a small contingency fund in the budget. If the Council was not able to move quickly enough in delivering the savings there would be serious difficulties. Following on, the Chief Executive reiterated that every council with social care responsibilities was experiencing pressure around Children’s Social Care and Adult Social Care, with very few not overspending. In the context of Rotherham, there was a higher overspend on children’s services, but the Council was not an outlier in terms of adult social care. As these services were facing challenges nationally, the approach had been to take evidence based practice from around the country to inform the proposals before Members.

Members sought assurances from the Chief Executive that the budget proposals submitted had been discussed in full and detail was available on how savings will be made. In response, the Chief Executive indicated that officers had provided proposals earlier in the year than previously had been the case and that if Members wanted more detail it would be provided. She cautioned that it was easier to provide detail when changing a line in a budget, as transformational change would require a strategy and parts of those proposals would only become clear when in the implementation stage,. She indicted that she was assured by the level of detail behind each of proposals which was presented for scrutiny, however she would be happy to receive feedback and learn from the experience and do things differently where it would be beneficial to do so.

Clarification was sought in respect of how the authority would consult residents, businesses and partners on its budgets savings proposals. In response, the Leader advised that the feedback provided by Overview and Scrutiny Management Board had been reviewed from the previous process and different ways had been identified to undertake consultation this year. He referred to budget consultation being difficult to engage with from a public perspective and highlighted the success of recent examples of consulting on service based proposals. There would be a chance to view all of the proposals online and this would be publicised. Furthermore there would be a chance to have conversations with people to take feedback on their priorities and make it a more useful conversation, so that public would understand why they do not see an increase of 6% in services when asked to pay the equivalent amount more in council tax. The Leader confirmed that the public consultation would end on 30 November 2018 and all feedback would be considered before the Cabinet recommended the budget to Council in February 2019.

Responding to a query from the Chair, the Leader confirmed that the savings proposals had been through a robust process and Members were aware that there was a limited amount of money available to fund services, which would be used to fund priority services and those that the Council was required to provide by law.

Members highlighted that an updated Medium Term Financial Strategy had not yet been presented for scrutiny and queried the level of confidence in the proposals as being achievable given the financial position. In response, the Leader confirmed that he was as confident as he could be given the circumstances. There was nothing in the savings proposals that should give cause for concern in respect of the headline numbers, as the numbers were credible. An undertaking was provided that the Medium Term Financial Strategy would be available for scrutiny Members through the pre-decision scrutiny process in December.

Members considered the following budget proposals: