My previous post on setting the budget ended with the words,
Over to the Government
All options are possible: worse, same or getting better.
Fingers crossed.
This was the week we found out.
Monday – I hate Mondays
The final settlement for most local authorities was published.
The key figure is the 1.9% increase in core spending power. This is based on Council Tax increasing by 4.99%. Yet local budget pressures are increasing by 18.81%. There’s a considerable gap.
The Govt recognised that the ceiling of 4.99% on council tax increases would place Trafford in an extremely difficult position and has consequently granted the facility to make an additional increase of 2.5%.
It’s at this point that the proverbial hit the fan. The fact that Trafford is one of a small number councils requiring this facility has shocked residents. Social Media has been on fire. It’s not been pleasant.
It’s hard to disagree with lots of these comments. The council tax increase is not going to result in notable improvements to service. The truth is that we’ve been hit by changes to the formula used by government to determine the distribution of centrally held funds.
Areas with high levels of deprivation have benefited from both increases to core funding and a recovery grant that’s given a substantial pick-me-up to most of our neighbouring councils. Only Stockport along with ourselves have missed out. Stockport has a much, much higher council tax with which to absorb this discrepancy. Trafford’s low council tax has kept us lean, but it’s left us incredibly exposed in facing this perfect storm.
We’re going to have borrow
This really worries me. We were given facility to borrow £9.6m to support this year’s budget, and it looks like we’ll be utilising most of it. We’re awaiting news of what the government proposes the facility will be for next year, but it could be more than last year.
I’m standing down in May and I hate the idea that I’m passing debt onto my successors because we didn’t have enough to pay for day to day spending. We’ve surely got to do as much as we can to limit this borrowing.
If we were able to set our council tax to the average level, we’d be able to avoid borrowing, but that would require an increase of about 17%. Despite it being the normal rate elsewhere, Trafford residents would not weather an extra 17% increase.
So where does that leave us?
Councillors will have to take the hit what is really an unsatisfactory compromise – unwelcome increases in council tax, a level of service that doesn’t meet expectations and increased risk of much worse as the debts begin to accumulate.
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