Choices in challenging times - background and financial context

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Foreword - Councillor Louise Gittins, Leader of Cheshire West and Chester Council

The Council spends £862 million on services for local people that range from social care and support for vulnerable families; to public protection, planning and economic growth; to libraries, highways and street cleaning; and many more services not listed here. These services have an impact on all our lives and our futures.

Budgets are about choices. Choices about what we spend your money on, how we shape the communities we live in and the services we receive. These choices need to be informed by what matters to you. These decisions aren’t easy - not least now.

We are in the middle of a social and economic crisis. The increasing cost of living is making it harder for many local people to make ends meet. We will continue to provide help within the resources we have available, but the Council is not immune to this crisis. Like organisations up and down the country, our costs have gone up, placing pressure on our finances. We also want to ensure adequate support for the increasing numbers of children and adults with complex needs that need our help. The funding we receive locally and from Government is not sufficient to balance the books without acting and making difficult choices. Overall, we could face a funding gap of around £105 million over the next four years. After additional business rates and council tax income are accounted for, alongside existing savings proposals that we have already consulted you on, the gap remains around £42 million, with £19 million we need to bridge in the first two years.

Our approach is to be bold, innovative, and in line with our values and your views. As in previous years, we want to continue to protect the members of our community who depend most on our help. We also want to introduce new ways of working that are more efficient and effective and to invest in prevention to avoid more people requiring more expensive care. However, some difficult decisions may need to be considered, informed by your views. We want to know what you think about our budget proposals for the next two years. These include areas where we could save money as well as areas we want to protect.

We must also plan for a future beyond the next two years and we also want your feedback on our emerging ideas to address the budget gap in the medium term.

Your feedback will help inform decisions we make when Councillors set the budget on 16 February 2023. Your responses are highly valued and I’d like to thank you for playing your part.


Background

We want your views on how the Council can set a budget for next year, in line with your priorities. We also want views on emerging budget ideas for the years ahead.

A series of budget proposals for the next two years, that we haven’t previously consulted on, are summarised alongside further early ideas for the years ahead. Questions on these proposals are included to help provide you with the opportunity to share your views. Many proposals may require further consultation and additional information will be shared at a later stage, but we want to be open about these emerging proposals. Some, more technical, proposals are not included as they won’t involve any changes to services. For example, we can look to fund existing services from available grants or other sources and we can ensure that our charges are in line with inflation so they cover their costs. A full table of proposals is included in Appendix A.

The budget will be considered by all Councillors on 16 February next year. Depending on your feedback, and any funding changes from Government, we may have choices on whether we need to deliver these proposals, and how achievable they could be. We may also need to find further savings over and above those in this document, so we are asking for your ideas on other ways we could raise income or save money.


Financial position

We provide a range of services that our communities benefit from everyday, like emptying your bins, removing litter and maintaining local roads. And we also provide a lot of services that you may not be aware of if you or your family or friends are not directly impacted, but which have a very significant call on our available resources. These are vital to many people in our communities, who need extra help and support.

For example, we:

  • support and care for elderly people and adults with learning disabilities, helping them to be as independent as possible
  • look after vulnerable children who need our support
  • help people with mental health challenges
  • work with families and individuals to prevent them becoming homeless as well as working with those who do face homelessness.

Looking after children and adults who need care takes up around two thirds of the Council’s budget.

All councils have faced increasing pressures on services and budgets for many years. More people with complex needs require our support and the funding that we receive from Government and from council tax has not kept pace with this increasing demand. We have always met our financial challenges and planned ahead, although this has required difficult decisions about our services and required new ways of working. Overall, in cash terms, we have made reductions of more than £530 million since 2009.

Added to this, we also now face rising inflation which has put pressure on our costs of £36 million over the next four years. We estimate we face a funding gap of around £105 million over the next four years. After additional business rates and council tax revenues are accounted for, alongside existing savings proposals that we have already consulted on, the gap remains around £42 million, with £19 million in the first two years.


How we are funded and how we spend our budget

The money we spend on services ultimately comes from the public. This comes from a mixture of local sources, including council tax, business rates and fees for services, as well as from grants from central Government, that we’re directed to use for specific purposes.

Since 2010, the proportion of central Government funding that funds our budget has reduced and councils are increasingly reliant on locally generated income. Councils set council tax levels and retain all monies collected, but they do not set the level of local business rates and only keep a proportion of the local rates collected. The Council retains about 40% of business rates and must give about £83 million to central Government.

Where money comes from:

  • 30% comes from dedicated schools grant and other school related grants
  • 25% comes from council tax
  • 18% comes from government grants
  • 7% comes from business rates
  • 7% comes from fees and charges
  • 3% comes from housing revenue account
  • 10% comes from other


Spending

This year we will spend £862 million on our services. This includes the funding we distribute directly to schools (£259 million Dedicated Schools Grant and other school related grants). Schools aside, the Council’s biggest area of expenditure is the £183 million that we spend on supporting vulnerable adults who rely on social care, and a further £75 million that goes towards supporting children and young people. The average cost of the services that this expenditure funds is increasing significantly. Since 2013-14, the annual cost of a child being in care has increased from £26,000 to almost £49,000 a year; the weekly cost of an adult care at home package has increased from £110 to £306.


Our services are organised into the following departments

Health and Wellbeing: This includes adult social care, public health, education, children’s social services, support for vulnerable families and early help and prevention services. While many of our residents may not use these services regularly, we have a number of legal responsibilities to provide care and support to our most vulnerable residents.

Overall, the budget for this area is £210.3 million a year and makes up a large proportion of our overall budget.

Communities, Environment and Economy: This area of the Council provides services such as highways, transport, street cleaning, libraries, waste, community safety, environmental health, licensing, trading standards, lifetime services, CCTV, parking, building control, housing, economic growth, planning, climate change response, culture, archives and heritage. This is a really important area of the Council for many of our residents who use these services every day, as well as for businesses in the borough.

Overall, the net budget for this whole department is £61.2 million.

Corporate and Council-wide: We have a range of support services that enable the Council to be safe and well managed. These include areas such as human resources, finance, ICT, legal, transformation, data and support to decision-making.

Overall, the budget for this area is £30.3 million.


Capital

Despite the pressures on our day-to-day spending, we have the opportunity to invest in assets that deliver an economic return or social benefit for the future.

We can fund one-off projects to build and develop assets, like leisure centres and roads, for regeneration programmes, or technology and equipment. Capital investment is raised:

  • from dedicated Government grants, some of which are automatically allocated and some we must compete with other organisations for
  • from private sector investment
  • from borrowing which is repaid over a period of years
  • from the Housing Revenue Account which is financed by, and allocated towards, council housing
  • through setting aside some of our revenue budget to fund future finance costs
  • through selling assets such as buildings or land that we no longer require to reinvest into public infrastructure.

Our programme of capital investment is likely to cost over £244 million between 2022 and 2026, requiring approximately £81 million of Council borrowing, with the remainder financed through other sources. We borrow this money, similarly to a mortgage, and it costs the Council around £21 million a year to meet the cost of all Council borrowing.

Whilst capital funding sums may appear significant, spending must be done within Government guidelines to make sure we don’t borrow beyond our means.

Foreword - Councillor Louise Gittins, Leader of Cheshire West and Chester Council

The Council spends £862 million on services for local people that range from social care and support for vulnerable families; to public protection, planning and economic growth; to libraries, highways and street cleaning; and many more services not listed here. These services have an impact on all our lives and our futures.

Budgets are about choices. Choices about what we spend your money on, how we shape the communities we live in and the services we receive. These choices need to be informed by what matters to you. These decisions aren’t easy - not least now.

We are in the middle of a social and economic crisis. The increasing cost of living is making it harder for many local people to make ends meet. We will continue to provide help within the resources we have available, but the Council is not immune to this crisis. Like organisations up and down the country, our costs have gone up, placing pressure on our finances. We also want to ensure adequate support for the increasing numbers of children and adults with complex needs that need our help. The funding we receive locally and from Government is not sufficient to balance the books without acting and making difficult choices. Overall, we could face a funding gap of around £105 million over the next four years. After additional business rates and council tax income are accounted for, alongside existing savings proposals that we have already consulted you on, the gap remains around £42 million, with £19 million we need to bridge in the first two years.

Our approach is to be bold, innovative, and in line with our values and your views. As in previous years, we want to continue to protect the members of our community who depend most on our help. We also want to introduce new ways of working that are more efficient and effective and to invest in prevention to avoid more people requiring more expensive care. However, some difficult decisions may need to be considered, informed by your views. We want to know what you think about our budget proposals for the next two years. These include areas where we could save money as well as areas we want to protect.

We must also plan for a future beyond the next two years and we also want your feedback on our emerging ideas to address the budget gap in the medium term.

Your feedback will help inform decisions we make when Councillors set the budget on 16 February 2023. Your responses are highly valued and I’d like to thank you for playing your part.


Background

We want your views on how the Council can set a budget for next year, in line with your priorities. We also want views on emerging budget ideas for the years ahead.

A series of budget proposals for the next two years, that we haven’t previously consulted on, are summarised alongside further early ideas for the years ahead. Questions on these proposals are included to help provide you with the opportunity to share your views. Many proposals may require further consultation and additional information will be shared at a later stage, but we want to be open about these emerging proposals. Some, more technical, proposals are not included as they won’t involve any changes to services. For example, we can look to fund existing services from available grants or other sources and we can ensure that our charges are in line with inflation so they cover their costs. A full table of proposals is included in Appendix A.

The budget will be considered by all Councillors on 16 February next year. Depending on your feedback, and any funding changes from Government, we may have choices on whether we need to deliver these proposals, and how achievable they could be. We may also need to find further savings over and above those in this document, so we are asking for your ideas on other ways we could raise income or save money.


Financial position

We provide a range of services that our communities benefit from everyday, like emptying your bins, removing litter and maintaining local roads. And we also provide a lot of services that you may not be aware of if you or your family or friends are not directly impacted, but which have a very significant call on our available resources. These are vital to many people in our communities, who need extra help and support.

For example, we:

  • support and care for elderly people and adults with learning disabilities, helping them to be as independent as possible
  • look after vulnerable children who need our support
  • help people with mental health challenges
  • work with families and individuals to prevent them becoming homeless as well as working with those who do face homelessness.

Looking after children and adults who need care takes up around two thirds of the Council’s budget.

All councils have faced increasing pressures on services and budgets for many years. More people with complex needs require our support and the funding that we receive from Government and from council tax has not kept pace with this increasing demand. We have always met our financial challenges and planned ahead, although this has required difficult decisions about our services and required new ways of working. Overall, in cash terms, we have made reductions of more than £530 million since 2009.

Added to this, we also now face rising inflation which has put pressure on our costs of £36 million over the next four years. We estimate we face a funding gap of around £105 million over the next four years. After additional business rates and council tax revenues are accounted for, alongside existing savings proposals that we have already consulted on, the gap remains around £42 million, with £19 million in the first two years.


How we are funded and how we spend our budget

The money we spend on services ultimately comes from the public. This comes from a mixture of local sources, including council tax, business rates and fees for services, as well as from grants from central Government, that we’re directed to use for specific purposes.

Since 2010, the proportion of central Government funding that funds our budget has reduced and councils are increasingly reliant on locally generated income. Councils set council tax levels and retain all monies collected, but they do not set the level of local business rates and only keep a proportion of the local rates collected. The Council retains about 40% of business rates and must give about £83 million to central Government.

Where money comes from:

  • 30% comes from dedicated schools grant and other school related grants
  • 25% comes from council tax
  • 18% comes from government grants
  • 7% comes from business rates
  • 7% comes from fees and charges
  • 3% comes from housing revenue account
  • 10% comes from other


Spending

This year we will spend £862 million on our services. This includes the funding we distribute directly to schools (£259 million Dedicated Schools Grant and other school related grants). Schools aside, the Council’s biggest area of expenditure is the £183 million that we spend on supporting vulnerable adults who rely on social care, and a further £75 million that goes towards supporting children and young people. The average cost of the services that this expenditure funds is increasing significantly. Since 2013-14, the annual cost of a child being in care has increased from £26,000 to almost £49,000 a year; the weekly cost of an adult care at home package has increased from £110 to £306.


Our services are organised into the following departments

Health and Wellbeing: This includes adult social care, public health, education, children’s social services, support for vulnerable families and early help and prevention services. While many of our residents may not use these services regularly, we have a number of legal responsibilities to provide care and support to our most vulnerable residents.

Overall, the budget for this area is £210.3 million a year and makes up a large proportion of our overall budget.

Communities, Environment and Economy: This area of the Council provides services such as highways, transport, street cleaning, libraries, waste, community safety, environmental health, licensing, trading standards, lifetime services, CCTV, parking, building control, housing, economic growth, planning, climate change response, culture, archives and heritage. This is a really important area of the Council for many of our residents who use these services every day, as well as for businesses in the borough.

Overall, the net budget for this whole department is £61.2 million.

Corporate and Council-wide: We have a range of support services that enable the Council to be safe and well managed. These include areas such as human resources, finance, ICT, legal, transformation, data and support to decision-making.

Overall, the budget for this area is £30.3 million.


Capital

Despite the pressures on our day-to-day spending, we have the opportunity to invest in assets that deliver an economic return or social benefit for the future.

We can fund one-off projects to build and develop assets, like leisure centres and roads, for regeneration programmes, or technology and equipment. Capital investment is raised:

  • from dedicated Government grants, some of which are automatically allocated and some we must compete with other organisations for
  • from private sector investment
  • from borrowing which is repaid over a period of years
  • from the Housing Revenue Account which is financed by, and allocated towards, council housing
  • through setting aside some of our revenue budget to fund future finance costs
  • through selling assets such as buildings or land that we no longer require to reinvest into public infrastructure.

Our programme of capital investment is likely to cost over £244 million between 2022 and 2026, requiring approximately £81 million of Council borrowing, with the remainder financed through other sources. We borrow this money, similarly to a mortgage, and it costs the Council around £21 million a year to meet the cost of all Council borrowing.

Whilst capital funding sums may appear significant, spending must be done within Government guidelines to make sure we don’t borrow beyond our means.