Forced austerity is set to continue after Wokingham Borough Council received the worst four-year financial settlement in its history from central government.
On December 17, central government announced that its provisional local government settlement would see the borough council lose more than 50 per cent of its revenue support grant (main grant) in 2016/17; a sum of approximately £6.3million. This was considerably worse than the council had been planning for.
And this week (February 8), central government announced these proposals would go ahead as planned. But following lobbying by the council and local MPs, ministers have agreed a transitional grant for Wokingham Borough Council of £2.1million for 2016/17 and again in 2017/18.
The transitional grant is temporary, and will allow councils extra time to plan how they will deal with the future. However it makes no change to the overall cuts from central government. Funding for services is required every single year. Whilst this temporary grant funds some of these services and provides some breathing space, when it is removed in 2018/19, the gap in funding still has to be found - either by cuts to services or additional income or both.
Cllr Keith Baker, leader of the council, said: "During the past few months we’ve been fighting, with the support of local MPs, for a fairer deal for our residents. Initially we were devastated because of what it meant to our residents and outraged they were being penalised for us being an efficient and self-sufficient council.
"We made numerous representations to ministers to challenge the unfair nature of the settlement. As leader of the council I met with the minister and John Redwood MP with the Secretary of State so that we could get our point across in face-to-face meetings. We talked to them about our financial challenges and how bleak the future looks for us. We lobbied hard for our residents because it is only right, and clearly this had an impact on government thinking.
"To some extent we’ve been listened to, and we welcome the transitional grant although it will be cut after two years. However the cut in funding overall is still severe and while we’ve had some concessions, there is a huge strain on our resources.
"Whilst in the short-term things look more positive, the end game is still the same, and just as challenging, because it’s a four-year settlement. By the end of 2019/20 we face almost impossible challenges as the council loses £20million and moves into a negative grant of £7million. By then the government ongoing grant will have been cut by 74 per cent, and residents will be paying 91 per cent of the costs of running services. These costs would have remained the same over the four-year settlement period despite the impact of inflation, and demographic changes like increased demand for adult social care.
"However this additional money will allow us time to have a more considered and planned approach for the future. The trajectory we’re on is the right one, and we need to carry on. We still have to make some tough choices as savings and extra income have to be found.
"Central government has changed the way it does its grant cut calculations and now includes council tax from our residents. But our residents are already paying a larger percentage of the costs of our services, to make up the shortfall in years of poor government funding. This means they’re being hit harder than anyone else – in reality the impact on our residents is a triple taxation.
"This is a fundamental flaw and we strongly oppose the new methodology of introducing council tax into the grant calculation."
The council is proposing an increase in council tax of 1.94 per cent. In addition, under new powers from government, the council has been granted the power to raise a social care levy to contribute to the growing cost of social care. The council is proposing a 2 per cent Adult Social Care Precept to protect its vulnerable adults, and this would be separately itemised on the council tax bill if agreed. This would raise £1.6million and would cover two thirds of the predicated rise in demand for this service of £2.4million. The balance would have to be funded from savings.
Taking both into account, the council’s share of the overall council tax would be: £1,295.31 for a Band D property; an increase of 94p per household per week.
"In the meantime we have to act, Cllr Baker added. "We are facing some very difficult decisions, and will be forced to look at increasing our income. We are in effect being forced to put up council tax. Looking ahead, the future looks bleak because we face a total loss of government grant by 2019/20 and extra clawback of business rates to pay for the negative grant. It has never been more important to plan for the future.
"It’s been clear for some time that we cannot carry on doing things in the traditional way we’ve always done them. With this in mind, we’ve been breaking the mould and are already doing things differently. We’ve set up seven traded companies; we have a number of shared services, we’ve made changes to council processes and systems to ensure we are as efficient and lean as possible. We also continue to look at new and innovative ways of providing high quality services at the lowest possible cost. We are also working actively with our neighbours to see how we can work together more to provide services at a lower cost for us all.
"And we remain ambitious and are a forward thinking council. Despite the savings needed this year, we’re keeping our commitment to capital projects which make Wokingham Borough a great place to live. Some £85million will be invested in 2016/17 to a range of capital projects such as new schools, roads and regeneration (this money is ring-fenced and can’t be used for operational services). Safeguarding children and vulnerable adults continues to be a top priority and our investments will help create sustainable communities for now and in the future."
Future savings are a challenge for the council, and they come on top of the £36.5million it has already saved since 2011/12.
Full details of the proposals are included in the agenda papers for the council meeting on February 18 and can be found on the meetings page.