Council budget plans to be considered

Telford & Wrekin Council’s cabinet will consider its proposed budget report at its meeting on Thursday (7 January 2021).

The Service and Financial Planning Strategy outlines the council’s budget plans for the next 12 months.

The council received its provisional funding settlement from Government on 17 December. 

The settlement announcement means that the council will receive nearly £1m less funding from government next year than in the current year. This is despite increasing demand for many council services, particularly adult social care services.

However, the government has said that the council’s “core spending power” will increase by 3.2%. This is because they have assumed that the council (like all other councils in England with responsibility for adult social care) will increase council tax by a total of 4.99% which is the maximum permitted for next year.

Following the settlement, the council faces a budget gap of just over £9.9m next year. If the council raises council tax by 4.99%, this will raise £3.64m towards this funding shortfall. 

Over the past 10 years, the council has been forced to make ongoing savings of £126.4m in order to set a balanced budget due to significant cuts to the grants provided by government. This is equivalent to having £700pa less to spend for every person living in Telford and Wrekin.

Over the same period of time, demand for many council services has increased significantly, as well as the cost of delivering many of them.

Additionally, the coronavirus pandemic has led to further pressures on the council’s budget.  

The government has continued to shift responsibility for funding essential local government services from government grants to local council tax payers in the funding settlements over recent years.

After more than a decade of severe financial constraint, Telford & Wrekin Council has already taken significant steps to increase income from new commercial ventures, like the council’s build to rent Nuplace project.  It has also made significant budget cuts, including the reduction of the workforce by over 1,600 posts.

However, the council will now have to find further budget savings and also ask residents to pay more council tax in order to continue to provide the level and quality of services required.

Cllr Rae Evans, cabinet member for finance and governance, said:

“We have already made huge budget savings over a number of years and this year is no exception.

“The shrinking of the government grant to councils has put pressure on councils to find other ways to raise money to fund services, like our Nuplace scheme which builds high quality properties in the borough for private rent and helps to fund front line council services.

“Without the 4.99% rise in council tax, we would feel the effects even more.

“This rise includes a 3% adult social care precept which must be fully invested into these services.

“The remaining 1.99% of the rise will raise £1.45m which is roughly equivalent to:

•The net budget for libraries which is £1.46m this year

•The cost of 64 internal foster care placements 

•The net budget for leisure centres is £1.477m this year 

“This money will be used to invest in and safeguard existing services delivered by the council for its residents and businesses.

“It will ensure that the council doesn’t need consider more extreme savings proposals such as the introduction of car parking charges, charging for green bins, or closing some of our leisure facilities or libraries.”

Councillor Shaun Davies, leader of Telford & Wrekin Council, said:

“There is a high level of uncertainty over the future financial sustainability of councils. 

“Once again this settlement is just for 12 months, this is the third consecutive year that the council has been unable to plan its budget more than one year ahead.

 “Some councils have already taken the unprecedented step of issuing section 114 notices, which freezes spending on all but essential items and requires the council to reset its budget.

“Whilst we’re not close to needing to issue a section 114 notice, there are many uncertainties facing the council next year and beyond. 

“These include the continuing impacts of the pandemic and fundamental changes to the local government finance system which the government have talked about for many years but for which no detail is available.

“The government will need to undertake a long overdue medium term Comprehensive Spending Review next year to enable public sector organisations to plan their budgets over more than a one year period.

“We continue to have the lowest council tax for the services that we provide across the whole of the Midlands region. 

“Even after the proposed increase and if no other council increased their council tax (which is extremely unlikely) we would still have one of the lowest levels of council tax in the Midlands and still be well below the Midlands average.

“For the average property in the borough (Band B), this 4.99% increase equals £1.01 extra a week on a household bill – less than the cost of a takeaway coffee.

 “We know that many people will be struggling financially, particularly as a result of the coronavirus pandemic. We have a council tax reduction scheme for those residents on lower incomes.

“Additionally, we are doubling the allocation for hardship funding to assist those facing the greatest difficulty paying their council tax.

“Undoubtedly, there will be tough decisions to take over the next 12 months, to make sure that we balance the books. But we will continue to lobby government for better funding of vital local services.”

Another report giving a financial update for the current year will also be considered by the cabinet on Thursday (7 JAN 2021).  

This report shows that the budget for the current year has largely been brought back in to balance following action taken by cabinet members and budget holders across the council and the receipt of some one-off emergency additional funding from the government to cover costs arising from the pandemic.