First indications are that the Comprehensive Spending Review has made little difference to Babergh’s need to find savings quickly. Delay of a full merger with Mid Suffolk until 2013 reduces cost savings and is likely to threaten council services.
What impact will George Osborne’s spending review have on Babergh?
Well, firstly, the cuts to our Government Grant are just as bad as anticipated. We will lose £1.5 million in the next four years. To put this into context, this year our total budget is around £16.5 million, of which the Government Grant was the largest component at £6.2 million. Receipts from Council Tax amount to £4.6 million.
Scarily the cuts to the Grant are front end loaded (presumably to concentrate our minds). Although on average the reduction will be 7 percent per annum over four years, or around 28% in all, the first year (2011/12) will see a cut of around 10 percent.
The Government has made it clear that if we freeze Council tax, we will receive a 2.5% grant. In the case of Babergh this will amount to an offsetting plus figure of c. £150,000. However, the 2.5% grant will very probably be lower than inflation and overall we will still need to find c. £470,000 in cost savings as a result of the Spending Review.
Other measures mainly concern our housing activities. On the face of it it looks likely that Babergh will have more resources and flexibility to deliver better homes for people in the District. This is much to be welcomed. However it must be remembered that the financing of housing is quite separate from the rest of the budget and cannot be plundered to pay for other services!
Uncertainty remains with regard to the loss of funds from the administration of concessionary fares, and a number of other matters. Further clarification will be received in November and December and I will update interested readers where changes are significant.
Thus it can be seen that the future for Babergh remains tough, and no relief is currently being achieved by improved levels of fee income from planning applications and the like. Income from Long Term Car Parking charges, newly introduced and still controversial, must be seen as a welcome addition to the sadly depleted budget, as will the initial savings from the merger of our Revenues and Benefits operations with those of Mid Suffolk and Ipswich B.C.
I do hope that residents (and those councillors who voted against the idea) will now have a clearer idea of why the savings that will be achieved by a merger with Mid Suffolk District Council are so vital. As things stand, even the money saved by a full merger will not be enough to completely fill the gap between income and expenditure, and further cost cutting is inevitable, putting pressure on services.
What a pity that, following the outcome of meetings at the end of September, we cannot effect a full merger of the councils from 2012 as originally envisaged. There is no doubt in my mind that the delay, was brought about by lack of courage on the part of some Liberal Democrats and Independents (or perhaps unwillingness among some to relinquish their seats in a slimmed down council?). The postponement will mean that valuable savings will be postponed, running into several hundreds of thousands of pounds; funds that would have gone some way to seeing us through this difficult period.
