Like Labour councils across the country, we are facing the complete cut of our support grant from the Conservative Government by 2020. Like Labour leaders, Labour mayors and Labour MPs, I have joined calls for them to end the cuts and stop the rapid erosion of the essential public services councils provide. I’ve taken those calls to the heart of Government, to Cabinet ministers and local MPs. Every week, in newspaper columns and in radio interviews, I remind the residents of our city of how deep and damaging these Tory cuts are.
Recently I and other Labour leaders met the Shadow Local Government Secretary Teresa Pearce MP, who was very supportive and pledged to lead the fight in the Commons for a fairer deal for our councils and local services. We have an excellent shadow CLG team in the Commons, including former council leader Jim McMahon MP.
We will tackle the 2017 Budget based on three Labour principles: getting basic public services right, protecting services for the most vulnerable, and ensuring everyone shares the benefits of a growing local economy.
So what is the scale of the challenge we face here in the city?
The council spends around £760 million a year on hundreds of different services from street cleaning to schools, libraries to homelessness, and street lighting to licensing bars and restaurants. The biggest part of our budget is social care, at around £163 million. In this budget we will have to address a predicted budget gap of £18m through savings, following a similar level of savings already being implemented this year.
This is because the government is cutting entirely what is called the revenue support grant to councils by 2020 and we have to meet growing costs and demands, across adult and children’s social services. The reduction in grant funding alone is around £27m by 2020. Our overall funding has reduced by around £45m over the last five years which, added to increasing costs and demands, has resulted in the very large annual savings we have and will continue to have to make.
As the government grant support is cut, there will be less money available for services the council could provide but isn’t required to provide. The bulk of the income we receive from parking charges, around £12.7m, goes toward funding the free bus passes for older people that the government does not fund. Similarly, we also have to put another £1.5m into support for people who can’t afford to pay all of their council tax, as Government is cutting the funding needed to do that.
The government is now also looking at councils taking financial responsibility for some NHS services, in crisis locally. Looking after older people, children in care and people with disabilities is already the largest part of our budget. Early estimates show that next year it will cost us at least £10m more. The government will again, through councils, allow two per cent to be added to your council tax bill to pay for this, but that will only raise £2.4m, not enough to keep up. Some councils are asking for another 2% on top of the 4% already allowed, but that would hit many on lower incomes very hard.
Your council tax used to make up around a third of what we spend on general fund services, with another third made up from fees and charges and the remaining third from business rates and government grants. There are also uncertainties regarding business rates; the government currently retains half of our local business rates, around £54m, and will be revaluing business rates next year. We don’t know how much we will receive from business rates by 2020, so we need to ensure more businesses come to the city. Businesses that create real jobs, not zero-hour contracts, and who pay a proper Living Wage, businesses that pay their taxes and are socially responsible.
As more students come to the city, fewer households pay council tax. While being a university city is part of our identity, there’s no ignoring the financial impact of providing services to non-council tax paying households. Landlords who let properties to students are also protected from business rates by the government; we have called for the right to charge landlords business rates so we recoup some of the money we need for public services.
Earlier this year we ran our City Innovation Challenge to find out if individuals, schools and businesses, had ideas to help out as our budgets shrink. Many said we should look to volunteering, and we have recently agreed a new volunteering policy. Meanwhile we are changing how we deliver services, with much more online, and more focus on joined up services in your neighbourhoods, designed by you around what works in your community.
As a Labour council we are building 500 new council homes, and 1000 homes to part-buy or rent at around 60% of market rates. Decent, truly affordable housing is one of the main ways we can get a grip on growing costs and tackle poverty and inequality locally.
We have no choice but to face the financial situation as it is, whilst fighting for a better deal from the Tory government. The Labour leadership made it clear last year that Labour councils cannot set illegal budgets by spending more than they bring in, and this was enshrined in Party rules by the NEC recently. We won’t be pushed down the wholesale privatisation route the Tories want, but we won’t just wash our hands of responsibility for the situation we find ourselves in – as the Greens did at the last budget council. The cuts we will have to make will be difficult and painful. None of us stood for election to make things worse, but we owe it to those who elected us to fight for the best possible outcomes under the worst of Governments.
We will make every effort to focus the money we have on getting the basics right, delivering the best services possible, and doing the right thing by those who most need help. We are paying all our staff the local Living Wage, and defending as many jobs as we can by bringing in new revenue. Where we can share services, use not-for-profit providers, get help from our communities and work in partnership with the voluntary sector to keep services running, we will.
It is a huge and very difficult task, but we are up for the challenge if you are behind us, supporting us in the face of these Tory-imposed cuts. Labour councils can make a difference, can deliver our values in office, and Labour will win nationally by showing we can run things locally. Let’s fight for our city and our services together.
You can find information about the council’s current budget here.