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Budget Preparation: 2011

Budget Preparation 2011This year, rather than simply have the Cabinet decide the draft budget, Fylde Council is consulting on where the cuts should fall.

We went along to hear what started as two meetings but became four, where the Community Focus Scrutiny Committee members were given some figures and asked to make recommendations to Cabinet about the budget for next year.

We thought our readers would like to understand how the drafting of Fylde's budget was approached (which is why we went along), but we find this a difficult article to write.

On the one hand we want to applaud any step, however small (and this was pretty small), toward consensus working amongst councillors. But equally, we observed a process that offered councillors a severely limited choice, and we got the impression that it was all quite a waste of time really.

The process that produced these deficiencies might have been officer inspired, (to limit the damage that Councillors could do to 'their' budgets) or it could have been politically inspired by the majority group in effect, saying:  When we're spending, we'll get the credit. When we have to make cuts you can share the blame. Or it might have been a matter of incompetence in getting the figures together in time, or some other reason altogether.

Either way, it was with something of an uneasy heart that we settled down to listen.

The introduction by the top officers said - in effect - We're faced with the need to cut budgets, what services are you prepared to reduce?

This approach wouldn't find much favour with counterbalance's current hero - Saint Eric Pickles. He argues that there is no need for service cuts, what you need is look at how services are delivered, and how much that way is costing, and whether it could be done differently and more cheaply. He's particularly keen in reducing staffing costs, which he says have got out of control.

But Fylde wanted its councillors to start the review by deciding which services to cut. They set out a list of services within each Directorate. These service descriptions were quite broad, but they had costs against them, and councillors were asked to consider them, and make any observations to Cabinet as to where service reductions could be made, or extra income generated.

The services were grouped under 'musts', 'could' and 'should' do - so, for example, all the statutory services - the ones the Council is legally obliged to provide - were under 'Must do'.

In the meeting preamble, we were first given some terrifying figures.

There would be a shortfall of £4m (on an overall budget of £11m) by 2015, and that ongoing savings of £1.2m would be needed by the end of 2012/13 rising to £1.8m by end of 2014/15. And they'd only allowed a maximum of 0.5% for pay inflation and 0% price inflation. (Inflation is currently 4.8% in real money)

These figures are pretty much worthless of course.

No-one can predict the rate of interest or inflation for 12 months ahead at present, (just look at the views of the Bank of England's Monetary Policy Committee who are split three ways just on inflation); so we treat them with the accuracy they deserve.

This was the woe woe and thrice woe of Cassandra setting the tone.

On a more sensible note, we were also told that all the available 'Earmarked Reserves' (which stood at £1.44m last March) had been already used.

There had also been very significant savings made by officers during the current year, and some projects that had previously been allocated funding had been put on ice until the position became more clear.

We thought we heard it said that the Beach and Dunes Management Programme, and Sports Development had been frozen, and any unspent money in them had been taken as a saving, but the acoustics were not that good so we couldn't be sure.

The position with Asset Transfers and 'headroom' was described as 'unknown' by the Chief Executive, but it was thought not likely to generate money for the Council this year.

This suggests officers aren't ready to let go of this plan until someone raps them over the knuckles with a ruler. The Chief Executive said there was a potential £300,000 to £350,000 saving to be made each year by using the 'headroom.'

Readers will recognise from other counterbalance articles that what he actually means is that FBC could get an extra £300k or more by persuading Town Councils to take on the work and precept their own tax for open space maintenance, whilst the Borough Council does not reduce its spending accordingly.

That means an extra £300,000 in tax from local residents though.

He added that, depending on how the council moved forward on this matter, the Asset Transfer scheme could generate an extra million a year over time. (That's actually an extra million in our Council Tax, money-laundered by Fylde through Town and Parish Councils)

And from something Queen Elizabeth Oades said, it sounded as though she'd heard it was provisionally still being programmed in for the financial year 2012/13 (just as counterbalance has previously predicted)

There was also uncertainty around the Housing Benefit grant that Fylde would get beyond 2012, and the potential income from the 'New Homes Bonus' was also uncertain, so nothing had been included as income - but it was thought possible to achieve £200,000 a year in the future.

It was also thought, (again depending on how the project worked out), that it might be possible to generate annual savings of £70,000 to £100,000 a year in lower utility, business rate, energy, and other costs if the 'Accommodation Project' goes ahead with a new 'greener' town hall building.

Another concern was that the Council's service-derived income is continuing to drop.

We think this is because they're hitting the top of what people can afford, and partly because the country is in 'austerity measures' anyway.

Staffing changes were still being negotiated, but £200,000 to £300,000 might be possible in future, and some recently completed capital spending such as the crematorium and new fleet vehicles had put them in a good position with lower future maintenance costs.

The long and short of it was that, aggregating all the money taken from Special and Earmarked Reserves, and maintaining the General Reserve at a level recommended as the minimum by external auditors, what had originally been a shortfall for next year of £705,000 had already been brought down to a shortfall of just £45,000

That's significant, but entirely manageable. That sort of reduction is almost petty cash.

There was to be debate about whether they should use all the savings that had been made so far just for the next year (2011/12), or whether they should cut more deeply next year, (so as to spread the recently achieved savings and next year's reductions over future years), and thus make life easier in the future.

Obviously, the councillors needed advice from Finance officers in this.

We've said before that, although we don't like his style (we consider it to be too secretive), former Finance Officer Bernard Hayes took the profligate Commissar's spending by the throat, turned it upside down, and shook it until the last penny had dropped out of it. He is a very competent financial officer and has done a great job to transform Fylde's money-management (mind you, it couldn't have been much worse when he took over). His colleagues are now following in his mould and Fylde's basic financial position is now on firm, if slightly thin, ground.

So with that good news, we moved from the introduction, to the meeting proper.

New pages were handed out with the figures on them, and the plan was for each Director to introduce their Section Heads who carried individual budget responsibility. They would explain what work their service did, and what the money was for, and answer questions on it. Councillors where then expected to say which service should be cut and by what proportion.

To put pages of budget figures out at a meeting (when the agenda has already been published for more than a week) is a pretty awful way to treat your Councillors. One said "We're going to be talked through these figures by the Directors aren't we? Another said "Can we have five minutes to read through the papers please?" Our comments would have been much stronger.

Very poor show.

So for five minutes the Chairman, (Cllr Keith Hyde) sat back and looked around himself in a bemused fashion, whilst everyone else tried to make sense of what they had been given. We guess he had either had all the figures explained to him beforehand and he understood them all, or he hadn't a clue about the content of the meeting he was chairing, and he only saw his role as being the administration of the meeting - keeping people speaking one at a time, and no cross talking, that sort of thing. We suspect he finds that role comfortable based on what we've seen him do before.

There was inadequate time for Councillors to assimilate the data. (Sometimes that's done intentionally to keep control to just a select few, but we honestly couldn't say whether it was the reason in this case).

When the Chairman called the meeting to order, the Director of Governance and Partnerships took the stand. She explained how the department was structured and what the main services were, and which of the items on the budget papers each related to.

We now find ourselves at another of those difficult points.

This had been another step forward.

It was the first time that most of the current councillors had understood who did what, let alone what was spent on the service. This information has been kept very tight within Cabinet (if published at all). So it is a major breakthrough just to involve the members in the information.

In fact, to us, it seemed the most important point of the meeting for some members was that councillors could put officers names against individual budgets, so in future when officers said they couldn't do something because there was no money for it, Councillors had some ability to come back, pantomime style, and say "Oh yes you have"

But of course the information they were given was nothing like what they needed to be able to decide where savings should be made in cash terms.

It transpired that the figures they were trying to make sense of, and work from, were figures that had been produced around 12 months ago when the budget for 2010/11 was approved. No financial update had been included to show the latest budget outturn position (even though we know that information exists). And there was no prediction of the likely position at the end of this financial year.

In some cases they were looking at figures that were £100,000 out from reality.

They were not happy.

But they were missing the point.

They weren't supposed to understand the present figures (and quite probably, officers wouldn't have wanted them to even know the current positions - because in the country of the blind, the one-eyed man is king.)

What they were obviously supposed to do was to look at the broad brush picture and say: well this service is less important than that one, but we don't want to lose it completely. Then officers could then make token changes that would make everyone happy.

That's not the way councillors work of course.

They are human, and most are essentially practical.

They are not interested in policy and broad brush. They never were, nor will they be. Councillors are only interested in the effects of policy on their electorate.

Nowhere was this more evident that the discussion on funding for the rodent control services. Officers probably expected councillors to say cut it by 'x' percent. But what happened was entirely predictable - the discussion slid imperceptibly into the problems experienced by Mrs XYZ when she had that big rat infestation last May, and the practical issues of having such problems resolved.

At one point in the questioning about rats, an officer said that a significant part of their income came from rodent control on parks and open spaces - we wondered if that had been factored in to the 'Asset Transfer' costs.

The officer also said they'd tried increasing charges to get more income, but people simply went elsewhere to commercial services. Councillors seemed keen to expand the service into other areas (farms, caravan parks etc) to generate more cash. A laudable aim and an understandable reaction, but we couldn't help wondering whether we were watching what started life as a public-health service and had now turned into the present 'publicly subsidised business' model, and was about to step merrily on its way into a full blown business.

And we wondered what was the point of having a public service that charged the same as (or more than) a commercial provider.

The discussion veered back to the minutiae of rodent control, and when this sort of thing happens, you often find officers smirking quietly, and exchanging conspiratorial glances that members don't ever 'get' policy, and they don't 'get' the sort of breadth a senior professional or technical officer needs to be able to run their section.

What this situation needs of course, is a short, sharp, shock amongst some (though by no means all) of the officers, to bring them back down to earth to run a more practical, less policy driven operation. This is what St Eric means when he says service cuts shouldn't be the first approach.

An operations manager of our acquaintance put it rather well. "When you're up to your armpits in alligators, its difficult to focus on the policy of swamp draining."  There are lot of snapping financial alligators around today, but not everyone sees them clearly.

The session on 'open space maintenance' wasn't any better. These services were all on the 'cuts' list, and the officer was on the backfoot from the start. We heard that the Fylde parks staff had already been cut from 22 down to 14, and savings could only be made by service reductions - differential mowing standards, and grassing over flower beds and so on.

But in the same breath he said he was maintaining the grounds in Wesham on contract to the Town Council there, and he was looking after the grounds in all the fire stations in Lancashire - from Skelmersdale in the south to  Bolton Le Sands in the north, to Earby in the east.

He was also bidding to take on work in Blackpool, Hyndburn and elsewhere in Lancashire.

We heard that his 'external grounds maintenance work' would bring in £234,000 next year, but we also thought we heard that this generated a surplus for Fylde of £15,000.

Again, the enunciation was not clear enough to be sure, but if it was, then you have to wonder whether an income giving a 6% return on capital is significant enough to warrant the distraction it will be causing to work within Fylde Borough - which is what the department is there for.

So the first day of the Scrutiny Committee didn't achieve all the work it should have done and no decisions on cuts were made.

The second day started much as the first, and we were not able to stay to the end of it. We did hear the end of the grounds maintenance session which seemed to get a bit ruffled when Cllr Silverwood asked about staff cost reductions and was told there could be none as the gardeners were already cut to the bone. She retorted that she was thinking more about the management costs. She will, of course, have had a detailed look at Fylde's grounds maintenance overheads as part of the Asset Transfer scheme to pass responsibility to Kirkham Town Council.

We had to leave after that, but we understand that meeting too overran, and a third day was added on. That took all the time to hear from officers, so there was still no discussion of areas for savings. That said, we did hear someone say the press office costs are likely to be recommended as an early choice for savings.

So a fourth day was scheduled for the Scrutiny Committee to look at the cuts.

Whatever suggestions come forward will be fed as recommendations to the Cabinet who will, as usual, make the final (ish) recommendation to the Full Council that will set the budget.

We say 'final (ish)' because none of this will stop the ruling group agreeing something different in private and whizzing it out at the Full Council budget meeting as a last minute amendment to catch everyone else off their guard and unprepared. It's happened before - especially under the Commissar. It will be interesting to see whether the David Eaves administration adopts the same tactics.

The fourth day of the Scrutiny committee was to debate the cuts in order to make a recommendation to the Cabinet, and we managed to hear almost all of it.

There was yet more new information handed round.

It was a public meeting and councillors were in open session, but the page of figures handed round had "NO REPRODUCTION" emblazoned across it.  We find this quite exceptional. It was clearly not 'exempt' or 'confidential' information (otherwise the meeting would have to have passes a resolution to exclude the press and public) but there was no mistaking the prohibition of reproduction.

We're seeking clarification of this at the moment and will post an update* (see end of article)  if it comes after publication of this article.

We could see no justification for the prohibition, but until the situation is clarified, we'll simply use the figures that were said by councillors in the meeting.

The Chief Executive gave out some revised figures based on further information he had received. He thought they had found some further savings going forward so the picture didn't now look as bad as it seemed.

This is the old 'rabbit out of the hat approach' that we've seen used time and time again at budget preparation. Disaster looms, huge cuts are needed, members are frightened off, then at the last minute up pops the rabbit and everyone goes home happy and grateful to the officers for getting them out of such a bad mess.

To be fair, the officers have done a good job during the year in finding what amounts to a huge saving, so the savings needed now for 2011/12 are quite minor, and might not be needed at all by the time we get to the budget.

But having gone through the work, members were keen to push some ideas forward.

To a man they complained about the way the process had been conducted. We absolutely agreed. In the concluding parts, Cllr Linda Nulty asked "When the agenda was written, were you asking for .... like... percentage reductions in services"

The Chief Executive said "Yes, when it was written; but we've tried to be more helpful and provided more analysis and detail as we've gone along"

Whether that statement amounts to a factual account of what happened, or a damage limitation strategy of providing too little too late, readers will have to form their own views about.

A few of the notable quotes and points in the discussion included:

Cllr Elaine Silverwood "So I make it we're only looking for about £45,000 savings then?"  and "We have to tackle the management costs, I don't like looking at this because it involves families and jobs, but we have to look at them"

Cllr Tony Ford: "Dog control - we need to be doing more, not cutting this one"

Cllr Linda Nulty: "What have the public been saying in the consultation and on the website - how can we consider decisions without knowing what they said. Otherwise what's the point in consulting" (Answer came there none) Also: "The press officer is not good value and we can't afford it"

Cllr Janine Owen: "Members and Cabinet allowances should be looked at and be subject to a cut the same as the Chief Executive has volunteered to take. We also need to look at the management costs within parks/leisure. The Council newspaper is another possible saving as are the Christmas cards we send out."

We didn't manage to stay the bitter end, but it seemed that the Committee passed on its concerns, and the Chief Executive would record and interpret them for onward transmission to the Cabinet who will actually make decisions about what to recommend to Council in March

Dated:   27 January 2011

Update 30 Jan 2011
FBC's response was "The reason for the watermark across the document was because the data contained in it was intended to be indicative for Members of the Committee in their general consideration of budget issues at the meeting - the data had not been fully validated. The author was happy for it to be in the public arena at the meeting subject to the above caveat (which was referenced a number of times at the meeting) and on the condition that it should not be relied upon in other forums or communications to be 100% accurate".


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