We’re still waiting for the Government’s decision. It normally lands by the end of January, so everyone’s feeling a bit on edge.
Somerset Council has already had to postpone their budget meetings in the absence of the final settlement.
One can imagine that the team led by Nico Heslop (Director of Finance) at MHCLG has had its work cut out in listening to the protestations of councils like Trafford over the proposed settlement.
My guess is that we will learn our fate this week. It will be good to channel all this nervous energy into constructive activity.
The Conservatives as main opposition party will want to put an alternative budget forward. The other parties might want to propose tweaks. They clearly need to see the Labour budget first.
If the law dictates that it all has to be done and dusted by March 11, we really need that final settlement agreed.
There’s been a couple of meetings this week. We’ve had the formal posting of the Draft Budget at the Public Executive. That was followed by the first meeting of scrutiny committee in relation to this year’s budget.
Normally, the scrutiny committee would have begun looking at this much, much earlier. They’d have looked at options and they’d have looked at the longer term context. Personally, I regret the omission of that earlier work. Scrutiny would have added to the case being made to government. We are where we are and I’ll leave that particular issue at that.
The Executive meeting was rather long, but the draft budget was formally adopted. This means we’ve set a balanced budget only on the basis of a £20m facility to borrow, that can only be granted by government in the form of Exceptional Financial Support(EFS).
It’s now down to the government whether to grant EFS in the form we’ve proposed (a loan) or in some other way. There’s an intense dialogue ongoing with Government and lobbying alongside our MPs. That won’t let up, but the government is moving from consultation to finalising the settlement and tabling the regulatory instruments.
I have no idea what to expect from Government and there is nothing to be gained by speculating at this late stage.
Let’s hope that there’s a route that puts us on a sustainable financial footing.
I did receive responses to the questions set out in the 5th piece. My verdict on the budget for children’s services being tight was conceded. We’re at a place where all the budget lines are tight. I think we just wait for the settlement now. All options are possible, worse, same and getting better. Fingers crossed.
Photo by Suki Lee: https://www.pexels.com/photo/close-up-of-hourglass-14826119/
Essentially, spending is the very core of the budget process. We’re describing how much the council intends to spend and setting out to raise sufficient income to pay for it.
Councils know there are limits to how much income they can generate, both in terms of the rules and in terms of democratic oversight.
If Council Tax is too high, the voters will vote for a party that pledges to tax a more reasonable amount.
Voters also expect to see the benefits of the taxes that the council is taking. They want clean streets, the bins emptying, roads maintained. But it’s not just the state of the place, they don’t want to learn that their elderly neighbour has starved because no one was caring for her. Voters get this, although I don’t think we make it easy for people to see where their money is going.
So anyway, the council sets out its projected spend by service*. We’re only going to need look at two tables:
A chart comparing spend by service in the current year with that projected for the coming year in the draft budget
Page 84 of the Draft Budget which is titled ‘subjective budget analysis’, but is actually a single table detailing all the changes to spend and why they’re happening.
*brief descriptions of each service stream are at the bottom of this post.
The first chart
With the publication of the draft budget, we can compare the budget for the coming year to what we’re looking like spending in the current year.
It’s not possible to provide a completely ‘like for like’ comparison. This is where that 2nd chart referred to above is particularly useful. We can see changes to and between funding streams. So, on that chart, there is an unassuming line ‘Grants, Legislative and Service Transfers’, that accounts for £29m of the increased budget costs.
The explanation is that the government have moved away from many individual grants and rolled them up into being part of the main allocation. This means the cost needs to be brought into the budget
This has particularly affected Adults and Wellbeing as it’s added £26m to the budget with the other £3m being attributed to ‘Council Wide’ provision. Given the main allocation which is referred to here as ‘business rate’ funding is only increasing by £23m, there’s a shortfall in the funding from government. That’s one aspect that’s made this a particularly difficult budget.
Nevertheless, in terms of scrutinising the spending plans, it would seem fair to test some of the assumptions.
Possible Questions for the Executive at Scrutiny
That Children’s Services budget looks ambitious. It’s normal that controlling the cost of children’s services that gives the council the most difficulty. What assurance can we have that a 3.77% can be constrained?
Legal and Governance seems to be getting quite a large increase of 10.18%. The bulk of this increase is just described as ‘other’. Can you provide more details?
Place is receiving a large increase of 11%. Are we expecting to see improvements to delivery? It’s primarily attributed to the Strategic Investment Programme. What will be the visible returns on this investment?
The Adult Services budget is seeing major changes with a move away from grants. We’re allocating that loss of grants (£26m) to the main budget. Given we’re not being compensated in business rates to the same level, would we not be justified in reducing the provision to a level commensurate with that now provided? What would be the effect? In any event how are we going to monitor this provision in the absence of grant funding for which monitoring would be standard.
I think we’ve also got to monitor head counts. We’ve invested quite a lot over the years in IT and efficiency. We don’t usually receive details of head counts, but I think the very fact we’re having to apply for support means we’ve got be transparent.
Appendix Trafford’s service headings
As a quick addendum, I just wanted to provide this brief description of service headings. Do we need quite so many? I’ll leave that for another day.
Children’s Services
includes a vast range of support services designed to help children and young people who need extra support.
Adults and Wellbeing including Public Health
a vast array of services many of which are statutory under the care act 2014
Place
The Place directorate provides all those services linked to buildings and the ‘place’ we live in. From bins to planning.
Strategy and Resources
Typically, things that Trafford operates as entities such as libraries and bereavement services.
Finance and Systems
IT and financial management activities
Legal and Governance
Registrars, Legal
Council-wide
Includes Asset Investment, Council Tax Support, Treasury management
The budget is published and the link is below. The council itself is recognising that the budget outcome is not the one it wanted, that there is a gap between the cost of the services it needs to deliver and the income that the council can raise (and keep).
I can’t add to the official line linked above. As I see it, the changeover to a new fairer funding model has left Trafford on the wrong side of a line. We’re flagging this up to the Government and seeking a financial accommodation from them.
Trafford remains a council that collects more money than it is allowed to spend itself. That surplus is only going to get bigger with projects like Therme and the Manchester United district. The idea of bankruptcy is just ludicrous.
It makes sense to look at Trafford’s income on its own. Trafford’s income is largely a case of what you see is what you get, with just a few areas of choice, notably the Green Bin charge which goes into reserves.
The Current Budget (25/26)
The cost of Trafford’s current services being delivered for this year is £233m. This has come from:
Business Rates £81m
Council Tax £139m
Reserves £3m
Capitalisation Direction £10m
It’s worth emphasising that there is absolutely no mention of Government funding. This conceals the enormous impact Government makes on the distribution of collected business rates.
Trafford collects a lot more than £81m from business rates on its businesses. In 24/25 the amount was £152m. So where’s that >£70m gone?
This leaflet was issued prior to a public health settlement that slightly boosted the budget. The figures at the top of this section are correct.
The Local Government Finance Settlement for 26/27
Despite the fact Trafford’s funding is entirely locally sourced, the Government (of all persuasions) is never going to allow Trafford free rein. In December each year the government issues the finance settlement.
For 26/27 England’s average increase in spending will be 5.7%.
Trafford’s increase will be 1.8%.
This assumes Trafford will increase its council tax by the 4.99% limit.
So, the starting point for Trafford’s budget setting is council tax going up by 4.99%, yet Trafford’s core spending will nudge up just 1.8%.
Only 1.8%! Where’s my council tax going? Where’s the increase going?
It’s a fair question to ask.
I suspect that both capitalisation direction (borrowing) and use of reserves were contributing to the current year’s spending power. The trouble is that they were one-offs and we haven’t got them next year. And it has to be stated that they haven’t got us out of a hole and the reserves are finite.
What about other councils?
We’re not alone nationally, but within Greater Manchester it almost feels as though we are. Greater Manchester has always been mix of the relatively prosperous alongside some of the poorest. That missing chunk of business rates is retained within Greater Manchester to support less prosperous areas here. That used to be fair.
My view is that the latest local government settlement is putting strain on the Greater Manchester consensus. Manchester Council is seeing a huge increase from this settlement, yet Trafford is a net contributor.
Nonetheless, our council tax on domestic properties is still low in comparison to our neighbours. Does it need to go higher again?
What next?
The draft budget needs to be published by midnight tonight. There has to be an emphasis on the word ‘draft’. Income is only half the story. We need the draft budget to understand spending pressures or easements.
Technically, the Local Government Finance Settlement is under consultation. I’m confident Trafford will have been making the strongest representation. There’s been some discussion in political journals that the calculation Government is making is favouring London by weighting the cost of housing. Instinctively, that feels like double counting since housing costs have to contribute to deprivation which is the major weighting within the settlement.
However, for Government to make changes to the formula would change everyone’s settlement. They’re not going to change the formula.
I think we do need to look at the Greater Manchester formula.
With regard to last year’s exceptional permission to borrow, I don’t think we ought to accept a regurgitation of that permission to borrow yet more money if that turns out to be government’s solution. That way is one-way and it ends in tears.
I want to understand business rate growth and that’s’ something I’m keen to see in the report. Trafford has benefited from growing its business rate base. That’s being reset by government but looking at the Old Trafford area, there is still potential to grow it still and that’s an aspect to give some optimism.
Finally,
The selfish reason for writing this that the writing is helping me understand the budget. I don’t want to rely on officers. I’ve had to go to core material. Hopefully, I’m able to share some of that knowledge and test it,
BBC radio did a piece on the sustainability of town centres over the weekend. They used Swindon as an example of a new(ish) town centre that was struggling and explored some of the approaches that might be taken. It was an interesting and balanced exposition.
I’m linking to the programme here but it’s only going to be available until late January.
The local Swindon media did a write-up of the segment and that might well stay up a good deal longer.
town centres are important, they matter to people.
Communities want town centres to give identity to the town they live in.
They need to be accessible – don’t ignore parking
The big anchor stores like Marks and Spencer’s are rare and unlikely captures, Focus on independents and smaller units.
Councils (and other public agencies?) should boost footfall through planning the distribution of their own facilities, libraries, sports centres, health facilities.
Bring employment into the town centre – offices above shops etc.
None of this is new, but it’s notable that it’s really only Sale and particularly, Altrincham that scores highly across the piece. Urmston does well in having a thriving hospitality sector and a large secure catchment.
Stretford is undergoing renewal. I’d have liked Trafford and the public agencies it has influence upon to have looked at Stretford as a place to locate some of their services and operations.
Stretford is unique within Trafford as being accessible from all corners of the borough. It’s the crossroads of Trafford. It’s really the place that the town hall should be.
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