Stop the neglect! Ban public bodies from owning buildings!

I was alarmed to hear on the radio today that the Government has postponed taking any decisions about the repair and restoration of the Houses of Parliament until 2020.   This has alarmed those who work in the Palace of Westminster and believe that the need to act to preserve the ageing fabric of the building is very urgent.

Once again it is hard to escape the view, stated before on this site, that public bodies should not be allowed to own buildings because they never look after them properly.

I well recall sitting in the chamber at Babergh while water poured through the leaking roof of the council chamber into strategically placed buckets during council meetings.  Belle View House, a council owned property in Sudbury,  was in the news once again last week as vandals took advantage of its abandonned and unguarded state.  This has done more damage to what was already a sadly neglected Victorian villa.   It is good to see that Sudbury Town Hall is having some much needed work done, but the fact that the extent of the repairs is greater than originally thought implies that attention should have been paid to the building at an earlier date.

The excuse for delay in all these instances will,no doubt, have been lack of money.  However the truth is that public bodies will always manage to find more interesting ways of spending their money than boring old renovation work.  They only spring to life when the need for action is well overdue.   Clearly those in power have never heard that a stitch in time really does save nine.

A day in London, Part 2.

Much of the afternoon of my trip to London on Wednesday was absorbed by a ‘Question and Answer’ event held under the impressive portals of the Central Hall in Westminster. The Government has proposed some radical changes in the way that Local Authority Pension Funds are managed, and the aim was to shed light on the progress being made.

This is an arcane subject and I will not dwell on the issues in any detail. Suffice it to say that in insisting on reform the Government seems to have two big ideas, plus one major prejudice.

The first idea is that a good deal of money could be saved were the funds to be ‘pooled’ into larger units by combining with others.   The Suffolk Fund currently amounts to around £2.5 bn. and we are aiming to form an alliance with nearby authorities that will produce a pool of £35 bn.

Whether or not costs will actually be saved by this complex exercise is unproven.  If one takes the not inconsiderable up-front costs of effecting the reorganisation, and understands that  likely savings will only be realised several years in the future, it is not hard to see that the whole exercise is unlikely to offer positive value.

The second idea is that some of the billions currently sitting in the pension funds could usefully be pillaged in order to pay for much needed infrastructure investment across the country.

Here the government really seems to have got hold of the wrong end of the stick.  There is no shortage of funds looking for investment opportunities in infrastructure.   Indeed, the Suffolk Fund already has exposure to an international infrastructure fund.  If the Government brings forward the right sort of opportunities (that actually produce an income stream representing an acceptable return for our pensioners) Local Authority funds will be falling over themselves to invest.  There is a suspicion however that these sorts of projects are not what the Government has in mind.

Then we come to the prejudice.  For all the talk of Devolution, there is no doubt that by and large Whitehall holds local authority councillors in contempt.    This is well illustrated by the Government’s clear intention to remove the right of elected Pension Fund Committees to appoint their own investment managers in consultation with their professional advisers.  In future, in the words of one public servant on the panel, this task will be carried out by a committee comprising apparatchiks such as himself, whom he rather inadvisably described as ‘more intelligent’.

Of course, given that the audience was largely made up by elected members and investment managers, this issue generated some excitement.  In the overall scheme of things, apart from the transparent insult to elected members, the change will make little difference to fund performance.  What really matters here is asset allocation which will remain the remit of the individual Pension Fund Committee. 

But the big issue is this: council pension fund Committees meet in public.  Anyone can come along and see decision making in action. I have real concerns about the scope for corruption when a group of unelected officers and City ‘experts’, meeting in secret, wield considerable power over decisions about the management of what is ultimately residents’ money.

Cameron and the state of local government finance, hypocricy or ignorance?

The Left has been quick to brand David Cameron ‘hypocritical’ because last week he wrote to complain to Oxfordshire County Council about cuts to local services in his Whitney Constituency. Surely he must be aware, they claim, that it is the financial constraits imposed by his own government that is causing the reduction in front line services to residents?

However, I am not sure that Cameron is being hypocritical  since hypocricy would imply that he has  a real understanding of the current state of local authority finances.  To my mind, his letter shows that this is not the case.  Rather he and his Government are actually only vaguely aware of the real difficulties now being experienced by many councils.

Perhaps, given the continuing need to do something about the level of national debt, it is easier for the government not to think too hard about the impact on councils of deep cuts in funding, past, present and future.  However, at the end of the day, anyone who gives it a moment's thought knows that one cannot keep hacking away at an organisation's cost base without some consequences.  There are certainly some councils that were very inefficiently run in the past.  These may well  have further fat to shed, but other more efficient operators, such as Suffolk County Council for example, are finding necessary cost reductions increasingly hard to find. 

Some Conservatives, in defence of the Prime Minister, have accused Oxford County Council of crying wolf....apparently the council started to warn of service cuts as long ago as 2010 and they have managed reasonably well to date.  Perhaps these warnings might have been premature, but there is no doubt in my mind that five years on OCC's complaints and fears are real.   A good deal of their grant from the centre has now disappeared, and there is only so far that one can go in reorganising and pruning the back office (as was suggested to them last week by Cameron). In any event  ultimately back office cuts if too extensive do impact on the front line. Moreover, research tells us  that faced with an impossible financial situation a council will cut services, even those that are statutory obligations,  rather than risk financial meltdown.

As I have written on this site before, earlier this year a report from the Independent Commission on Local Government Finance stated that when it came to financial strength 'local government is on a cliff edge'.  They criticised central Government for its lack of understanding with regard to the relative financial strength of different public bodies and their ability to withstand cuts which have been indiscriminately and equally imposed across the board.

Mr Cameron's letter provides further evidence that the ICLGA was right; so not a hypocrite perhaps, but certainly ignorant.

Three thoughts after the budget

The Chancellor yesterday said remarkably little about local government in his budget speech. We must assume therefore that little has changed and the need for cost savings remains as pressing as ever.

The budget, it seems to me, affects Suffolk County Council in three important ways.

Firstly there was no mention in the budget of a continuation of the council tax freeze that was in place during the last Parliament.  Many councils will therefore be looking to raise the tax to help to bridge potential budget deficits in years to come.  Suffolk County Council, for better or worse, has pledged not to increase council tax in the current council, so will need to find savings from elsewhere.

Secondly the 1% pay freeze on public sector pay going forward should help somewhat if it can be made to stick against a 2% inflation target.  Despite the fact that many of the council's activities have been outsourced, wages remain a large component of cost and a 1% rise will help to keep the inflation component of the forecast in check.

Finally, and possibly most importantly, the commitment to a compulsory living wage is, in the absence of compensatory government help,  likely to have a negative impact on SCC's finances.  This is not so much in relation to the council's own staff.   Recently the Council agreed to pay the current living wage to all staff at a cost of around £60,000, and future above inflation rises should be relatively easily accommodated.  Contractors however, particularly in the area of adult care, often do not pay the living wage, and it is generally thought that do so so would put unsustainable pressure on the care related costs.  Adult Care is an area that is already showing signs of stress, and is an area of high risk for budget savings going forward.

I cannot believe that the Government will ignore this position, and anticipate that further action to 'join up' heath and adult social care, to release efficiencies for both the NHS and local authorities, must be on the way.   I certainly hope that I am right.

Humankind cannot bear very much austerity, a comment on the Greek 'no' vote, (with apologies to T.S. Eliot.)

I am not at all surprised at the 'no to further austerity' vote that was the result of Sunday's referendum in Greece.

I do not think that the collective population of a country in financial distress is very different from a single human being in the same position.

When I worked at the Citizens Advice Bureau a good proportion of our clients were people who, through no fault of their own, had got into debt.   Sometimes this was the result of profligacy, but far more often it was due to some 'life accident' such as illness, bereavement or divorce.

As a matter of course we would sit down with our distressed client and work out a personal budget for them, seeking some relief from their creditors and mapping a way towards solvency once again.

What we learned very quickly however is that people can only 'economise' for a limited period.  For a while they can manage without things that, although not absolutely essential for survival, make life worth living.  Ask them to follow a regime of personal austerity for too long however, and failure to keep to the repayment plan was the inevitable outcome.  Experience taught us in fact that five years is generally the maximum time that people can 'do without'.

The corollory to this was that if the position was too hopeless, and the time of austerity necessary unreasonably long, then bankrupcy, and the relatively clean sheet that that offered, was the better option.

The Care Act and Budgeting

Suffolk County Council has now published its budget for 2015/16 and this will be considered by the Cabinet on Tuesday before being debated by full council on 12th February.

We will be seeking to fill a budget gap of some £38m next year and we are aiming to do this largely through a series of transformation programmes.  These are based on radical service redesign, increased use of IT, demand management and partnership working.  We very much hope that these will prove succesful since they are the main hope of maintaining front line services while saving money.

One of the most uncertain and highest risk areas for us over the next year or so is the implementation of the Care Act.  This comes into force in stages this year and next.  The Act involves us in a range of  increased responsibilities in the area of care, particularly in respect of those needing care in their own homes.  We have received an additional £7m or so to help us with this, but we estimate that this sum is not really adequate to do all that is required by the Act.  Demand for care in a county such as Suffolk, which has a disproportionate number of people over 65, rises exponentially every year and it is a real challenge to know how this growth can be contained within current budgets.

If you are interested in the details of the Care Act, there is a useful introductory video available here.

Council services threatened by cuts in 2015/16?

Having fought a good fight in the face of Government cuts over the last three to four years, it is clear that councils across the country are finding it increasingly difficult to protect front line services.

Local authorities  are now finalising their budgets for 2015/16 and reports from all over the country show that financial pressures are clearly starting to be felt.  Cuts in staff and bureaucracy have already been made, the ‘easy wins’ have been won, but on average spending power next year is estimated to be some 14.5% lower.  

In the Independent on Sunday today here we read about a number of councils who are looking to local communities to take on services that they have been able to provide up to now.  Many of these are ‘non statutory’ and so in theory at least can be outsourced, or even cut completely, without legal challenge.  

 At Suffolk County Council we have already undertaken a good deal of this sort of activity; devolving country parks and rights of way for example and transferring our Library Service into a mutual.   Other activities have been spun off into wholly owned companies, and many of our in house services are now commissioned from elsewhere.    It may be due to this early action, combined with planned service transformation, that the budget for 2015/16 is likely to balance without the need for too much pain.

However, according to another report, Austerity Uncovered, by the admittedly partisan TUC  and the Centre for Local Economic Strategies, some councils are now threatening to cut back on statutory services, having done all they feel they can in the discretionary area.  Here they are straying into dangerous territory since a judicial review of service failure can be a very expensive process.

The response of Central Government to this prospect of systemic service failure has been sanguine to say the least.  In part this has to be put down to wilful blindness about what is actually happening outside the Whitehall bubble.   It is also due to ignorance.  I do not say this out of pique.  A recent report by the highly respected National Audit Office found, in the words of the Local Government Information Unit, that while there are signs of improvement, the Department of Communities and Local Government ‘does not gather sufficient evidence to tell whether individual councils are able to cope with expected cuts in funding.  The regulatory constraints have so far prevented any council suffering wholesale financial failure; instead, financial stresses are felt in particular service areas.  The report finds that DCLG’s information is too patchy to identify where particular authorities may be unable to maintain the statutory level of service in some areas.’ 

As someone who now spends a good deal of time trying to balance the budget at Suffolk County Council, I find this ignorance depressing, but not particularly surprising.  We, in common with other local authorities, have tried to communicate the problems that lie ahead both to Government through our MP’s and other channels, and also to local residents .  It seems however that neither central government, nor, according to the article in the Independent ,  two thirds of people have taken this on board.

The real situation in unlikely to be hidden for much longer.

LGA Finance workshop

Conference Centre at Scarman House

I spent Thursday and Friday of last week at Warwick University Conference Centre attending a workshop for council finance portfolio holders run by the Local Government Association.

This might seem a rather dull way of spending time, but it was in fact a stimulating and interesting couple of days.  I was rather thrown into my new role back in May, having only been on the County Council for a year, and there have been times when I have been beset with serious doubts about what I am supposed to be doing.  I do have a background in finance, having worked as an analyst advising public companies and investors for 20 years or so in the City, but the world of Local Government finance is very different.   From the moment you find out that income in a council’s budget is treated as a negative number you realise that you are in a totally different world.

The negative income question (along with a lot of other mysteries) was dealt with by the facilitators of the event with clarity and wit, and we also heard from a number of experienced councillors who have been in their finance roles for some years.  I am not sure if I am very much clearer about what I ‘should’ be doing, since clearly they all take an individual approach, but I now have the confidence that I can pretty well carry on in my own particular way.

The political balance of the delegates was mixed, with 5 Conservatives, 5 Labour and a solitary Liberal Democrat from South Lakeland District Council.  It was interesting to exchange views and ideas with them.  It was also fun on the Friday morning because the Labour party people present were all glued to their mobiles watching as the results and turnout numbers gradually emerged from the counts for the South Yorkshire election for Police and Crime Commissioner.  By the time the morning was over it was clear that their candidate had won, so they all went home in a cheerful state.

I too was happy to be on my way back to Suffolk, although this didn’t last long since the traffic on the way home was terrible!

Superfast broadband, the next 10 percent.

At the Cabinet meeting last week a further £10m of funding was committed by the County Council to extend the reach of super-fast broadband in the county from the 85% that is currently planned to 95%.  This money will be matched by the Government and the LEP, and work is expected to start when the current contract is completed at the end of 2015.

Furthermore, we heard about a couple of pilot projects, one of which is taking place in Aldham, where new technology is being tested to bring fibre cabling closer to the end user.

The current contract is going well, currently being a couple of months ahead of schedule.  It does not do to be complacent about this however, since bad winter weather could well slow progress.

The newly funded 2016 project will initially prioritise areas that were excluded by British Telecom from the original bid because they had planned to link these up themselves.  Once the contract was won however these plans were abandoned.  Rather annoyingly Newmans Green, where we live, is one such area.  At present we appear as a blank spot on the map, but now it seems there are prospects of becoming super-fast in the not too distant future!  Other areas that it might be possible to prioritise are places where clusters of remote rural businesses are struggling to operate.I really hope that this will happen.

The council is now turning its attention to the last 5% of the county that is too far from the network to benefit from the latest expansion plans.   It is probable that other forms of technology, based on wireless or satellite, may be necessary to achieve 100% coverage.  Additionally we are looking to see what can be done to improve wireless signals across Suffolk, a new and different challenge.

I will report any progress on these two later developments when it is available.