Unprecedented Times - foreword and financial context

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

We live in unprecedented times. Since March, we have faced the biggest public health emergency in living memory. Families, businesses and communities have rallied together to support each other, and the Council has played a vital role in protecting lives and livelihoods. At the time of writing we are seeing concerning rises in COVID-19 infections and new national restrictions. We need to do all we can to avoid further waves of this terrible virus. At the same time, we know the best way to manage a crisis is not just to deal with it, but look beyond it. For this reason, we are working on plans to recover from the pandemic, underpinned by the principle of building a stronger, fairer and greener future.

Against this backdrop we must ensure our budget for the future is balanced, reflects your priorities, and is linked to our vision for the borough.

This is, perhaps, one of the biggest challenges we have ever faced. It is likely we will need to make significant reductions to our budget. We face an uncertain economic future. Demand pressures on services may increase and we have little clarity on funding that will be available to us from Government.

We have managed our financial position carefully but, overall, we could face a funding gap of £89 million over the next four years. After business rates and Council tax are accounted for, alongside existing savings proposals that we have already consulted on, the gap remains between £34 million and £43 million, depending on the national funding available. We are having to make plans to address this gap in a one to four year period because of the uncertainty in funding from Central Government. Whilst Cheshire West and Chester Council is recognised for innovation, these financial challenges and uncertainties are forcing us to investigate budget proposals that we would not usually consider.

Our proposals will help address this funding gap, but we need your input and no final decisions have yet been made. Your views will be considered by councillors when they set the budget on 25 February 2021 and I can assure you that your feedback is highly valued.

The Council Plan, known as Play Your Part to Thrive, paints a vision of all our communities working alongside us to tackle shared challenges. Now, more than ever, this approach is needed if we are to confront these unprecedented times and build a stronger future.

Background

We want to hear your views on how the Council can set a balanced budget in these unprecedented times. We need to set a balanced budget, but also ensure our communities, businesses and residents are supported to come out stronger from the COVID-19 pandemic.

At the time of writing Central Government has not completed its Comprehensive Spending Review, which is designed to provide clarity on the public money available for the next four years. In the absence of this information, we do not know the full extent of the budget challenge we will face, but it is likely that significant savings and efficiencies will need to be made, and we will continue to face pressures on local services that support those with the most complex needs.

A series of proposals are included by Council function, which will be considered by all councillors on 25 February next year. Depending on the outcome of the Comprehensive Spending Review and your feedback, we may have choices on whether we need to implement these proposals but also choices on their timing. Unfortunately, we may also need to find further savings above those in this document so we would also like your ideas on further ways we could raise income or save money. We are seeking to be prepared for all eventualities.

We plan to close this listening exercise on 3 December 2020. The results will be published on our website in February 2021 so that you can see how your views have influenced our decisions. We will then bring forward proposals to be voted on at our full Council meeting, scheduled for 25 February 2021.

Some of the proposals in this document are at an early stage of development and will require more engagement and conversations with the public and others. For some proposals, this will happen in parallel with this exercise. Other proposals will require further consultation following the agreement of the budget.

COVID-19:

The COVID-19 pandemic has been the biggest challenge faced by our communities and the Council in living memory. The community has been at the forefront of the response and all sections of society have played their part. The Council has also played its part, including the following.

  • Contacting 10,000 shielding local people to offer support and providing 1,143 food parcels
  • Assisting 6,446 businesses with vital funding and support
  • Coordinating 1,233 volunteers to assist residents
  • Supporting care services and ensuring PPE (Personal Protective Equipment) is in place to protect local people, care homes and staff
  • Providing ongoing advice and guidance to residents and businesses
  • Helping over 51,000 children and young people to return to school
  • Assisting the high street and public facilities to reopen in a safe way
  • Implemented our own Borough test and trace system to help contain the virus based on local insight and local action

As well as the costs of these vital services, the Council has seen income reduce from a range of fees, charges, and local taxes during the pandemic. Our current estimate is that COVID-19 has cost the council around £36.7 million. The Government has provided some welcome additional funding to partly cover these costs, but around £8.6 million is currently unfunded. Our budget must balance, so these unfunded costs will unfortunately mean savings will need to be found to pay for them – unless the Government provides additional funding.

Against this funding backdrop, society has now changed. People may be more likely to use digital technology, whether in relation to work or accessing local services. Local public services, including councils and the NHS, and the local voluntary sector, are working more closely together than ever before. Businesses are looking for support to adjust to a new economic environment and communities are looking to be involved in addressing local issues with our support and encouragement.

We are responding to this new situation with a Recovery and Renewal Plan, based on a vision of building a stronger, greener and fairer future. It reflects the broad priorities of the Council Plan and has also been used to guide the financial proposals within this document.

Financial position:

Since 2010 we have received significant reductions in Government funding, while facing increasing pressures on services. There are more people with complex needs that we must support. Overall, in cash terms, we have seen funding reductions of almost £400 million since 2010.

We start from a challenging position and have always looked to plan ahead, in line with our legal responsibilities, and identify changes to services that enable us to balance the budget.

Last year we conducted a significant review of our budget for 2020-2024. This placed us in a good position to weather the storm created by COVID-19 and helped protect this Council from some of the urgent financial measures that some other councils have had to introduce. We are planning to implement proposals totalling £13.5 million for the next four years, which we have consulted on previously. These proposals are confirmed and will continue to be delivered. But the uncertainties we face mean that we need to go further. Depending on the outcome of the Comprehensive Spending Review, we may need to save between £34 million and £43 million over and above the changes we have already set. This is made up of anticipated reductions in funding from Central Government and investment required to meet cost and income pressures across the Council.

In the absence of certainty, we have included a range of proposals for you to consider. Proposals totalling £7 million that are more technical in nature are not included in the sections below to enable a greater focus on areas that have more of an impact on services and residents. A full list of proposals is available in Appendix A.

Subject to national funding decisions and local service demand pressures, we may be in a position where we do not have to take forward all our savings proposals, or may have more time to implement them over a number of years; but it is also possible that the savings we have proposed may not go far enough. If we must increase our proposed savings, this is likely to require some even more challenging decisions on further cuts and service reductions within a shorter timeframe. We would welcome your views on how we could bridge the gap, should it become necessary.

How our budget is funded and spent

The money we spend on services ultimately comes from the public. This includes a mixture of local sources, from Council tax and business rate payers, and fees for services and grants from Central Government, mainly for specific purposes.

Since 2010, councils are increasingly reliant on locally generated income, as Central Government funding has been cut. Councils do not set the level of local business rates, but they can keep a proportion of the local rates collected to encourage economic growth. However, the Council only retains about 40% of business rates, and has to pass about £92 million to Central Government in respect of 2019-20 income.

Where the money comes from:

  • 29% comes from dedicated schools grant
  • 25% comes from council tax
  • 19% 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 sources.

Spending

This year we will spend £804 million on our services. This includes the funding we distribute directly to schools (£230 million Dedicated Schools Grant). Schools aside, the Council’s biggest area of expenditure is the £178 million that we spend on supporting vulnerable adults who need social care, and a further £69 million that goes towards supporting children and young people. The costs of these services are increasing significantly. Since 2013-14, the annual cost of a child under the age of 18 being in care has increased from £26,000 to £43,000 a year; the weekly cost of an adult ‘care at home’ package has increased from £110 to £213.

The chart below shows how the Council’s resources are currently distributed against each of our departments, as well as the money which goes directly to schools:

Where the Council is spending its budget in 2020-21

  • 31% is being spent on Health and Wellbeing, which includes adult social care, public health, education, children’s social services and early help and prevention services
  • 29% is being spent on Schools, which covers funding allocated to schools to provide education and support to schools
  • 17% is being spent on Communities, Environment and Economy, which includes highways, transport, street care, libraries, strategic housing, economic growth, leisure, culture and heritage
  • 23% is being spent on Council-wide services, which includes Council-wide budgets that support all services and support services such as customer relations, democratic services, legal services, finance, human resources, communications, research, change and technology.

Council Companies

The Council has created six companies that deliver services on behalf of the local authority and other customers. Collectively they employ 2,800 staff and spend £70 million to deliver key services such as adult social care, support to schools, leisure and waste collection. We work very closely with these companies to help them develop by securing more income from other sources beyond the Council and reducing their costs to make them more competitive. We also place a lot of emphasis on them being responsible employers and progressive companies which work closely with residents and communities. The companies are an integral part of the Council and it is important that they play their part in addressing the financial challenge and support the delivery of the Council’s objectives.

To support them in this we are exploring the following:

  • Creating a group structure that provides cost effective back office support to the wholly owned Council Companies and enhances the link between the Council, its companies and residents’ expectations.
  • Reviewing their facilities and services offered to ensure they meet the needs of local people. This is particularly relevant now with a review of Brio, the Council’s leisure company. A public listening exercise is underway to find out from local people how the service could better reflect the needs and aspirations of our different communities.
  • Identifying any links between the companies and reducing duplication through a review of all the services we currently commission through these organisations.
  • Ensuring their employment offer is in line with the values of the Council, is fair, and is sustainable.

Capital

Despite the pressures on our day-to-day spending, we have the opportunity to invest in assets that deliver an economic or social return into the future. Under the rules set for local government, we can invest in projects that deliver a financial return to the Council, or where we can fund the financing costs of investment from within our revenue budget. We also bid for external funding to enable investment in assets that support our local economy and public services.

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:

  • through selling assets such as buildings or land we no longer require
  • from dedicated government grants
  • from private sector investment
  • from other 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.

We are planning to invest over £350 million between 2021 and 2025, requiring approximately £113 million of Council borrowing, with the remainder financed through other sources.

Key areas of focus for the programme include:

  • supporting regeneration, housing and economic recovery from COVID-19
  • tackling the climate emergency
  • investing in our neighbourhoods, including the provision of additional housing
  • investing in leisure assets to improve the wellbeing of residents
  • improving our technology to deliver better services for our residents and customers
  • developing schemes within the borough to ensure the Council is positioned to attract any Central Government funding that is available
  • maintaining our assets, whether that means buildings, roads or IT equipment.

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

We live in unprecedented times. Since March, we have faced the biggest public health emergency in living memory. Families, businesses and communities have rallied together to support each other, and the Council has played a vital role in protecting lives and livelihoods. At the time of writing we are seeing concerning rises in COVID-19 infections and new national restrictions. We need to do all we can to avoid further waves of this terrible virus. At the same time, we know the best way to manage a crisis is not just to deal with it, but look beyond it. For this reason, we are working on plans to recover from the pandemic, underpinned by the principle of building a stronger, fairer and greener future.

Against this backdrop we must ensure our budget for the future is balanced, reflects your priorities, and is linked to our vision for the borough.

This is, perhaps, one of the biggest challenges we have ever faced. It is likely we will need to make significant reductions to our budget. We face an uncertain economic future. Demand pressures on services may increase and we have little clarity on funding that will be available to us from Government.

We have managed our financial position carefully but, overall, we could face a funding gap of £89 million over the next four years. After business rates and Council tax are accounted for, alongside existing savings proposals that we have already consulted on, the gap remains between £34 million and £43 million, depending on the national funding available. We are having to make plans to address this gap in a one to four year period because of the uncertainty in funding from Central Government. Whilst Cheshire West and Chester Council is recognised for innovation, these financial challenges and uncertainties are forcing us to investigate budget proposals that we would not usually consider.

Our proposals will help address this funding gap, but we need your input and no final decisions have yet been made. Your views will be considered by councillors when they set the budget on 25 February 2021 and I can assure you that your feedback is highly valued.

The Council Plan, known as Play Your Part to Thrive, paints a vision of all our communities working alongside us to tackle shared challenges. Now, more than ever, this approach is needed if we are to confront these unprecedented times and build a stronger future.

Background

We want to hear your views on how the Council can set a balanced budget in these unprecedented times. We need to set a balanced budget, but also ensure our communities, businesses and residents are supported to come out stronger from the COVID-19 pandemic.

At the time of writing Central Government has not completed its Comprehensive Spending Review, which is designed to provide clarity on the public money available for the next four years. In the absence of this information, we do not know the full extent of the budget challenge we will face, but it is likely that significant savings and efficiencies will need to be made, and we will continue to face pressures on local services that support those with the most complex needs.

A series of proposals are included by Council function, which will be considered by all councillors on 25 February next year. Depending on the outcome of the Comprehensive Spending Review and your feedback, we may have choices on whether we need to implement these proposals but also choices on their timing. Unfortunately, we may also need to find further savings above those in this document so we would also like your ideas on further ways we could raise income or save money. We are seeking to be prepared for all eventualities.

We plan to close this listening exercise on 3 December 2020. The results will be published on our website in February 2021 so that you can see how your views have influenced our decisions. We will then bring forward proposals to be voted on at our full Council meeting, scheduled for 25 February 2021.

Some of the proposals in this document are at an early stage of development and will require more engagement and conversations with the public and others. For some proposals, this will happen in parallel with this exercise. Other proposals will require further consultation following the agreement of the budget.

COVID-19:

The COVID-19 pandemic has been the biggest challenge faced by our communities and the Council in living memory. The community has been at the forefront of the response and all sections of society have played their part. The Council has also played its part, including the following.

  • Contacting 10,000 shielding local people to offer support and providing 1,143 food parcels
  • Assisting 6,446 businesses with vital funding and support
  • Coordinating 1,233 volunteers to assist residents
  • Supporting care services and ensuring PPE (Personal Protective Equipment) is in place to protect local people, care homes and staff
  • Providing ongoing advice and guidance to residents and businesses
  • Helping over 51,000 children and young people to return to school
  • Assisting the high street and public facilities to reopen in a safe way
  • Implemented our own Borough test and trace system to help contain the virus based on local insight and local action

As well as the costs of these vital services, the Council has seen income reduce from a range of fees, charges, and local taxes during the pandemic. Our current estimate is that COVID-19 has cost the council around £36.7 million. The Government has provided some welcome additional funding to partly cover these costs, but around £8.6 million is currently unfunded. Our budget must balance, so these unfunded costs will unfortunately mean savings will need to be found to pay for them – unless the Government provides additional funding.

Against this funding backdrop, society has now changed. People may be more likely to use digital technology, whether in relation to work or accessing local services. Local public services, including councils and the NHS, and the local voluntary sector, are working more closely together than ever before. Businesses are looking for support to adjust to a new economic environment and communities are looking to be involved in addressing local issues with our support and encouragement.

We are responding to this new situation with a Recovery and Renewal Plan, based on a vision of building a stronger, greener and fairer future. It reflects the broad priorities of the Council Plan and has also been used to guide the financial proposals within this document.

Financial position:

Since 2010 we have received significant reductions in Government funding, while facing increasing pressures on services. There are more people with complex needs that we must support. Overall, in cash terms, we have seen funding reductions of almost £400 million since 2010.

We start from a challenging position and have always looked to plan ahead, in line with our legal responsibilities, and identify changes to services that enable us to balance the budget.

Last year we conducted a significant review of our budget for 2020-2024. This placed us in a good position to weather the storm created by COVID-19 and helped protect this Council from some of the urgent financial measures that some other councils have had to introduce. We are planning to implement proposals totalling £13.5 million for the next four years, which we have consulted on previously. These proposals are confirmed and will continue to be delivered. But the uncertainties we face mean that we need to go further. Depending on the outcome of the Comprehensive Spending Review, we may need to save between £34 million and £43 million over and above the changes we have already set. This is made up of anticipated reductions in funding from Central Government and investment required to meet cost and income pressures across the Council.

In the absence of certainty, we have included a range of proposals for you to consider. Proposals totalling £7 million that are more technical in nature are not included in the sections below to enable a greater focus on areas that have more of an impact on services and residents. A full list of proposals is available in Appendix A.

Subject to national funding decisions and local service demand pressures, we may be in a position where we do not have to take forward all our savings proposals, or may have more time to implement them over a number of years; but it is also possible that the savings we have proposed may not go far enough. If we must increase our proposed savings, this is likely to require some even more challenging decisions on further cuts and service reductions within a shorter timeframe. We would welcome your views on how we could bridge the gap, should it become necessary.

How our budget is funded and spent

The money we spend on services ultimately comes from the public. This includes a mixture of local sources, from Council tax and business rate payers, and fees for services and grants from Central Government, mainly for specific purposes.

Since 2010, councils are increasingly reliant on locally generated income, as Central Government funding has been cut. Councils do not set the level of local business rates, but they can keep a proportion of the local rates collected to encourage economic growth. However, the Council only retains about 40% of business rates, and has to pass about £92 million to Central Government in respect of 2019-20 income.

Where the money comes from:

  • 29% comes from dedicated schools grant
  • 25% comes from council tax
  • 19% 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 sources.

Spending

This year we will spend £804 million on our services. This includes the funding we distribute directly to schools (£230 million Dedicated Schools Grant). Schools aside, the Council’s biggest area of expenditure is the £178 million that we spend on supporting vulnerable adults who need social care, and a further £69 million that goes towards supporting children and young people. The costs of these services are increasing significantly. Since 2013-14, the annual cost of a child under the age of 18 being in care has increased from £26,000 to £43,000 a year; the weekly cost of an adult ‘care at home’ package has increased from £110 to £213.

The chart below shows how the Council’s resources are currently distributed against each of our departments, as well as the money which goes directly to schools:

Where the Council is spending its budget in 2020-21

  • 31% is being spent on Health and Wellbeing, which includes adult social care, public health, education, children’s social services and early help and prevention services
  • 29% is being spent on Schools, which covers funding allocated to schools to provide education and support to schools
  • 17% is being spent on Communities, Environment and Economy, which includes highways, transport, street care, libraries, strategic housing, economic growth, leisure, culture and heritage
  • 23% is being spent on Council-wide services, which includes Council-wide budgets that support all services and support services such as customer relations, democratic services, legal services, finance, human resources, communications, research, change and technology.

Council Companies

The Council has created six companies that deliver services on behalf of the local authority and other customers. Collectively they employ 2,800 staff and spend £70 million to deliver key services such as adult social care, support to schools, leisure and waste collection. We work very closely with these companies to help them develop by securing more income from other sources beyond the Council and reducing their costs to make them more competitive. We also place a lot of emphasis on them being responsible employers and progressive companies which work closely with residents and communities. The companies are an integral part of the Council and it is important that they play their part in addressing the financial challenge and support the delivery of the Council’s objectives.

To support them in this we are exploring the following:

  • Creating a group structure that provides cost effective back office support to the wholly owned Council Companies and enhances the link between the Council, its companies and residents’ expectations.
  • Reviewing their facilities and services offered to ensure they meet the needs of local people. This is particularly relevant now with a review of Brio, the Council’s leisure company. A public listening exercise is underway to find out from local people how the service could better reflect the needs and aspirations of our different communities.
  • Identifying any links between the companies and reducing duplication through a review of all the services we currently commission through these organisations.
  • Ensuring their employment offer is in line with the values of the Council, is fair, and is sustainable.

Capital

Despite the pressures on our day-to-day spending, we have the opportunity to invest in assets that deliver an economic or social return into the future. Under the rules set for local government, we can invest in projects that deliver a financial return to the Council, or where we can fund the financing costs of investment from within our revenue budget. We also bid for external funding to enable investment in assets that support our local economy and public services.

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:

  • through selling assets such as buildings or land we no longer require
  • from dedicated government grants
  • from private sector investment
  • from other 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.

We are planning to invest over £350 million between 2021 and 2025, requiring approximately £113 million of Council borrowing, with the remainder financed through other sources.

Key areas of focus for the programme include:

  • supporting regeneration, housing and economic recovery from COVID-19
  • tackling the climate emergency
  • investing in our neighbourhoods, including the provision of additional housing
  • investing in leisure assets to improve the wellbeing of residents
  • improving our technology to deliver better services for our residents and customers
  • developing schemes within the borough to ensure the Council is positioned to attract any Central Government funding that is available
  • maintaining our assets, whether that means buildings, roads or IT equipment.