The Council Tax Story 2016
What it means for us locally
The Government Settlement for Kingston
This has been a difficult settlement for Kingston, but we will rise to the challenge it presents and use the opportunity to reshape the Borough and make the Council ready for a new landscape in Local Government that dawns in the next four years.
Because of the need for austerity the Government has cut the RSG (our grant) by 41% in a single year - a cut from £18m to £11m. We had been led to believe that this figure would be 24% and we had prepared budgets before Christmas at this level and with a 0% rise in Council Tax. Over the longer four year settlement our grant will reduce by 112%, the final 12% paid for by a reduction in the amount of retained business rates.
This rapid change in funding leaves us with a £2.4m gap in the budget that can only be met through increasing our income, or cutting our expenditure further.
The reasons for this difference are to do with a change in methodology for calculating which Borough gets which amount of grant and an abrupt change in the Government's view about Council Tax. We have moved from a position where freezing Council Tax was rewarded, to one where rises in Council Tax are expected.
Kingston is not alone and many of the Outer London Boroughs, who are dependent on Council Tax income rather than grant, have found themselves having their grant cut heavily, in the expectation that Council Tax will rise by a low percentage to bridge the gap. This includes Richmond, Bromley, Barnet and Bexley, to name a few.
We have expressed our anger to Government on this issue and are working hard to lobby for further changes, including bringing forward our proposal for Business Rate devolution which the Government have accepted is the way forward and will implement by 2020.
We need to find nearly £15m to balance the budget
Prior to Christmas we had settled on a budget that produced £12.2m of savings and no increase in Council Tax.
As part of the Comprehensive Spending Review, in November 2015, the Government announced that they wish to introduce a new precept for a 2% rise in Council tax, ringfenced to help with the rising costs of looking after our elderly and vulnerable residents. Most Councils are expected to implement that precept.
After the Government’s settlement we are now faced with a need to find nearly £15m, including another £2.4m of what are currently unidentified savings.
Making such large additional reductions at such short notice would hit those front line services that we could cut quickly, such as highways and pavement maintenance, increased parking charges, closing libraries, cutting school crossing patrols, further increases in charges for burials or even cutting flood management. We have rejected these short term options as it is our view most residents would find these types of cuts to universal services unacceptable.
Instead, we have decided to share the £15m of cuts required by the Government between savings in Council services and increases in Council tax on the basis that whilst services will take the larger part of the planned savings (87.5%), Council Tax must play a part and be increased by 1.99%, which coupled with the Government's Social Care surcharge of 2% means a gross increase of 3.99%.
However, the good news is that this is the year that London Boroughs stop paying for the Olympics (part of the Olympics was paid for by a charge on the GLA element of the Council Tax), this means that the overall increase in Council Tax at Band D will be kept down to 2.15% in cash terms or £3 per month.
Council Tax has been frozen for the two years since the last elections and we had hoped to freeze it again for another year, but given the extreme conditions in which the Government has unexpectedly left us we believe this is a good deal for local residents. This means that overall the rise for a Band D taxpayer will be limited to £36 a year.
At this stage we are making no forecast of the level of Council Tax in future years, but are publishing the levels of savings we need to make over the period to 2019/20. We will be working towards the further savings that we are required to make and which will total £35m in savings in the ten years until 2020.
Making the savings through innovation
Kingston has used the opportunity presented by austerity to become a innovative Council that is leading the way in delivering Council services, but The Government settlement has left us with some very difficult decisions.
Outcome based budgeting
In making the reductions we have taken the decision that 'salami slicing' every service is not a viable way to run the Council as eventually every service becomes 'poor'. For the first time (and as a trailblazer amongst a very small number of Local Authorities) we have commenced Outcome Based Budgeting.
This process has given us 8 outcomes that the Council consider priorities for Kingston. Each of our services has been matched against those outcomes. Where that service does not match an outcome the decision has been taken to no longer provide.
It is this process that has given us savings this year of approx £12.5m and will continue to contribute to the further savings we need to make over the next four years.
Kingston Co-ordinated Care
The co-ordination of the needs of older people between health and social care has for a long time not met the needs of either the individual or the budgets which fund their care. The health service and the council work hard on their behalf, but the level of integration for those who are in and out of hospital, or cared for at home, is sometimes lessened by the 'process of care' that they frequently encounter.
Kingston Co-ordinated Care is a ground-breaking programme that brings together the health sector and the council into a new vehicle which will create a single pathway of provision for older people. This programme has been developed between Council staff, health practitioners and the voluntary sector and places the patient at the heart of the provision. New care Hubs and advanced carers will look directly after the needs of the individual, rather than vulnerable people being driven through the process by the system. This will create a people-centred service that increases resident satisfaction and drives down costs.
It will be implemented on 1st April 2015 but our testing and piloting has demonstrated much higher levels of co-ordinated, people centred, care at a vastly reduced cost.
The scale of savings required will lead to difficult decisions and include as examples:
ending the distribution of free bags for food disposal
reductions in the public health budget around smoking cessation and sexual health
increasing the amount of self service provision in libraries
increasing income from translation services
increasing charges from bereavement services
savings from extending the grass cutting contract
moving to better co-ordinate Borough wide highways maintenance
a new Rose theatre contract
a new recycling contract saving £4.2m over the lifetime of the contract
There are over 120 lines of individual savings and a variety of efficiencies and savings.
What else are we doing?
This budget marks the start of a move to a new type of Council. By 2020 the very shape and size of Local Government will have changed and Kingston will be at the vanguard of those changes.
The 'More Human' Council
For too long Councils have put the needs of residents too low in our priorities and in a new dynamic world we need to improve the communications and understand better the needs of residents. But we also need to drive down costs.
The Council needs to become “more human”, where it matches the needs of all residents to the services that can be provided by a greater range of private, public and voluntary sector organisations. This approach will mean that by 2020 we will have many fewer directly employed staff and a single building, but there will be a range of new organisations providing services to our residents and organised by this new model Council of the future.
This vision is of a Council where services are publicly organised but not necessarily publicly delivered.
This programme is also indicative of the type of new ‘Kingston family of services’ where Kingston based public services start to come closer together as a single point of contact, work together and even work out of the same buildings.
Business rates reform
Kingston has been campaigning to become independent from Government grant funding since the Summer of 2014. Our current budget problems stem from cuts to our Revenue Support Grant and yet between the total sums we collect in Council Tax and Business Rates we have more than enough money to sustain our services. We proposed to Government a scheme that would allow our Revenue Support Grant to be surrendered in return for the equivalent cash position in retained business rates (the bit we retain).
We were gratified that in Autumn 2015 the Chancellor announced he has accepted our scheme and was looking for all Local Government to retain 100% of business rates and be grant free by 2020 - the year after this settlement plan period.
As part of this current poor settlement we are now pushing Government to introduce a pilot for our scheme at the earliest opportunity and if not by April 2016 then for 2017.