We are just beginning to come to terms with the financial situation in which Central Bedfordshire Council (CBC) has been left, by the questionable financial decisions of the previous ruling party. We have a number of concerns.
As a new Independent administration, we always knew we’d have a fight on our hands with the finances, but we also feel strongly, that whatever it looks like, it’s important we keep YOU informed. This isn’t about us asking for sympathy though; we’ve got some ideas for how to put things right!
The first thing we learnt was that in the coming year the existing plans allow for a £9m deficit between what the council proposes to spend, and where it has the income to pay for it. The only way of meeting the gap is to take that money from the council’s reserves.
So, can’t it just borrow money?
Local authorities’ finances are broken down into two parts. The revenue budget and the capital budget.
The revenue budget is the money required to run ongoing services e.g. paying staff, the cost of electricity for streetlights, getting the bins collected and filling potholes. About £470million per year. Whereas the capital budget relates to expenditure on permanent big things e.g. new schools, leisure centres, care homes and new roads. Another £327million over the course of 4 years,
The revenue budget has strict rules about how it is funded. There are some grants from the government, local fee income (e.g. parking charges or planning fees), and of course the biggest source, of cash…the Council Tax we pay ever year.
First, revenue budget – keeping the lights on.
In the plans left by the previous administration, large sums of money would be taken from reserves in order to balance the budget. This was something we first highlighted earlier this year:
The amounts planned to be taken from reserves weren’t small – £19million over the course of 4 years – Half of what is known as the ‘General Fund’ of reserves. This fund includes anything which has not been earmarked for a specific purpose. What’s more we discovered that before we took over, a further £6m was to be added to reserves and would need to be used for the same purpose, making a total of £25m taken from reserves.
What’s more, the revenue budget contains many ‘efficiencies’. These are what the council calls the cost saving measures included in the budget. Without these ‘efficiencies’ the budget doesn’t balance and would not have been passed as ‘legal’. However, we discovered some of these ‘efficiencies’ were not backed by detailed plans and are unlikely to be delivered.
We have started going through this very carefully to understand what is realistic.
All of the above is included in what is known as the revenue budget. We have also started to get to grips with the council’s £327million ‘Capital’ budget. As mentioned, this relates to all the big permanent physical projects such as schools, leisure centres and roads.
This can’t be paid for by Council Tax and instead has to be is funded by the council selling off publicly-owned land, for development, income from developers in the form of Section 106, government grants, or by borrowing.
Given CBC has relatively little (compared to the money required) public land to sell, we have raised concerns about the previous administration’s plans to massively expand the borrowing. Essentially paying for important amenities on the hope of future uncertain income. This plan would see debt rise from £400million to £856million in just 5 years. Significantly, for much of this debt there is no formal plan to use our capital income to repay it, rather an assumption that it may be necessary to extend the borrowing. We have also raised concerns about this in the past
We believe this is unsustainable, what’s more such an increase in debt would pass huge problems back to the revenue budget as high interest repayments would reduce the amount of money available to run the council.
When we went through this capital budget, with a fine toothcomb, we discovered it didn’t even include all the expenditure required for major projects. For example, the capital budget only accounted for £48m of the £350m required for the project to upgrade schools for the change to 2-tier education. The rest of the money required wasn’t funded, on the basis it fell outside of the four-year period for the capital budget.
Instead, the previous administration was using something called the ‘Pipeline’, which included many, many projects for which there wasn’t any plan for generating the required funding.
It was like a ‘Spreadsheet of Dreams’.
Included within it were important projects like children’s homes, work on schools and leisure centres, and at least £6m of road mending which the council was hoping to achieve, in the coming year.
At one point we discovered a school had been told it could have £28million for new buildings. In the current financial year. Even though significant sums were in this pipeline.
And none of this is illegal.
So, what are we doing about it?
- From Day 1 we’ve been working closely with senior council officers to understand what steps can be taken as soon as possible, in order that the council does not have to cut key services. We’ve seen some really positive plans, and a strong willingness to work with us, and use innovative ideas.
- We are adamant that steps must be taken to avoid just shifting all responsibility onto the public through Council Tax.
- We will work with departmental heads to ensure realistic budget levels for the next financial year.
- A budget plan has already begun for 2024/25.
- We are reviewing everything within the Capital budget to try to find ways of reducing the increase in debt.
- We’ll be consulting properly and clearly, with the public, and working with councillors of all political groups. We have no monopoly on good ideas.
- We will focus efforts on reducing the council’s spend on agency staff, the cost of which is often much higher than with full time employed council officers.
We will remain committed to protecting the welfare and the wallets of the public.
Cllr Mark Smith
Independent Central Bedfordshire Councillor for Ampthill, Maulden, Clophill & Millbrook