City of York Council battling to beat the funding gap

WE’VE feared it for months, now the coalition’s spending review has confirmed that the good times really are over as City of York Council battles to bridge a huge gap in its finances.

Put simply, we are living longer and the ratio of tax payers to recipients is reducing; the days when council workers took care of most things in our city are about to end.

Further evidence comes in the form of a new bill which the Government is calling a “ground-breaking shift in power to councils and communities”; one that will overturn what is seen as decades of central government control.

The Localism Bill aims to end to the “hoarding of power within central government and top-down control of communities, allowing people the freedom to run their lives and neighbourhoods in their own way”.

It is another piece in the Big Society jigsaw and will attempt to set a framework for local councils to devolve services in a bid for reduced costs and greater efficiency.

Communities Secretary Eric Pickles promises this will be a “new democratic settlement”, but following the spending review, will this lead to better quality services for less money or are we being sold short?

There is no doubt money is tight, but according to City of York Council chief executive Kersten England, the scale of cutbacks revealed in the review had been predicted.

“We have been forecasting a gap in funding for next year of about £15 million and an overall gap of £50m over the next four years,” she says. “That was on the basis of assumptions we made before the spending review decisions.

“Clearly we didn’t know the detail for York until last Monday, but I have to say my finance team is on the money because what became clear is that we had made accurate forecasts. But that still leaves us a huge gap in what we need to run the services.”

The funding gap is not just about reduced government funding, or formula grant, but the shortfall between council tax and income and the demand for services, which is rising primarily because of demographic changes.

Councillors will set the budget for the next financial year in February and because their decision will affect everyone in York, councillors want to know which services we think are most important and where we believe savings could be made.

To find out, they have introduced YouChoose, an online budget simulator. This is a national survey adjusted for York’s circumstances and lets you set hypothetical budgets for services. It also shows the direct impact your spending choices would have on local services such as social care, road maintenance, rubbish collection and libraries, together with the knock-on effect on council tax rates.

City of York Council corporate accountant Andrew Crookham believes YouChoose is a major step forward for local democracy. He said: “This is an empowering tool and a powerful indicator of what people in York really want to see the council involved in.” While the decision will ultimately be one for councillors, they believe they will be better informed armed with residents’ responses to the surveys. To this end, YouChoose is designed to help us consider where budget cuts and efficiencies could be made and where income might be generated.

“When you have a rise in demand, but no more money coming into the system, the gap is wider than just the reduction from government,” says Ms England.

“The funding gap we have for 2011/12 is about increased demand with declining income from things like planning application, car parking, discretionary spend – the things people choose not to spend on when they are worried about household budgets.”

For the spending review, councils were placed into four bands to make sure the impact would not exceed 8.9 per cent of any authority’s spending power as a whole. And York has actually come out of the spending review rather better than might have been predicted because it is less dependent on government grant than some councils in that only 60 per cent of its money comes from council tax.”

And, says Ms England, while City of York Council spends one of the lowest amounts per head of population among UK local authorities, it still provides the same services as higher-spending authorities. It has also been on a cost-cutting drive for two years with the More for York efficiency programme which saved £7m this financial year. Services have been merged, buildings sold and more efficient work practices employed. Ms England also says there has been a 33 per cent reduction in the top two tiers of senior management.

“But that will only take us so far and now we have to think how we protect our core and statutory responsibilities. We are at the point when we need to ask what are we fundamentally here to do.”

The stark reality is less than you might imagine. The council has a statutory responsibility to protect vulnerable individuals and communities, to support schools and protect children from abuse as well as keeping the city safe, clean and well lit. Most of its other activities are discretionary.

“A lot of the work we do around communities, leisure, parks art galleries and museums and funding the likes of visit York are choices that we make. And we make them because they are important to the city. If, as a council, we have to – quite rightly in my view – discharge our core responsibilities, thereafter we really need to be in discussion with the people of York about what are their priorities, and that’s where the budget consultation comes in.”

That debate will cover how we get involved in providing some of the non-core services. How we avoid becoming a cultural desert in the wake of efficiency savings.

Clearly the council needs to pare to the bone – not its choice, but one dictated by Westminster. This is where the Prime Minister hopes his Big Society will come to the rescue.

“Of the things we do what could individuals, volunteers and communities take more responsibility for? We’ve already dipped our toes in the water on this. Last year we said to residents it costs £2.50 per street to sort your kerbside recycling. If you are prepared to sort your own, we could save and redirect that money. We need to do more of that kind of conversation.”

Take first line preventative work; say for the elderly who are in danger of becoming isolated or vulnerable. The council believes community and faith-based organisations could easily take on the mantle by befriending and visiting.

“In youth services at this time, our priority is the most vulnerable young people, so can we have a conversation with the voluntary sector, who probably provide more services than we do, about whether they might take on the universal bit of the provision to ensure every child in any community has a youth facility that they can use and it doesn’t have to be the council who runs it.”

It’s the same with libraries. In future they may become community hubs owned and run by residents and featuring such things as crèche facilities.

Then there is provision for icy weather – highly topical at the moment. Already the council has spent this winter’s budget to keep the roads clear.

“Part of the debate is do we look at models on the continent where there is a legal duty to clear the frontage of your house and do we look at stimulating the market for winter tyres and invest in the equipment as a one off now because we know it will save money. We know grit doesn’t work below minus 15, so what do if winters like this become the norm? “But if discretionary services are about to be taken over by us, does that guarantee frontline services will be ring- fenced? We will still be looking at making efficiency savings because we have to. The message is not that statutory core won’t have to change and we are looking at how to bring down in-house costs, because at the moment it costs more than it would from the private sector.”

Surely there’s not much left to cut back and after two years of efficiency savings, if the paring back hasn’t already been done, then why not? Now there only seems to be one area left to cut, and that is jobs. Six hundred and fifty were already earmarked to go – and that was before last week’s announcement.

“That was based on our forecast of what would be said. But it’s different to losing jobs because I’m endeavouring to do it by freezing vacancies and with our age group being what it is, there will be successive waves of retirement in the next few years.”

Then there are job shares, sabbaticals and opting to work only during term time. Where humanly possible, Ms England says, there will be no compulsory redundancies.

“I want highly motivated, talented staff and I have that group now. So I want to support them as much as possible. What I cannot do is have that as an over riding objective to providing the right service. The most important thing is actually what happens out there for the people of York and I can’t protect people where it impinges on that objective.”

The rocky road to recovery will be a long one and there are sure to be more pitfalls along the way. While the state of the economy in four years time may be difficult to predict, one thing is certain; the good times where councillors took care of York’s day to day running are now but a distant memory.

• If you want to try balancing City of York Council’s budget, visit the YouChoose an online budget simulator at youchoose.yougov.com/York