At this morning’s meeting of Dumfries and Galloway Council, Councillors agreed to a further meeting of Full Council on 29 February to consider any budgets that meet the of the Scottish Government’s funding requirements.
The Council Leader, Ronnie Nicholson, informed the meeting that the view of the Administration was that a number of savings options provided to Groups would be too damaging to our local services if taken.
The Leader informed the meeting that the Administration was developing a number of alternatives that they believed would minimise the impact on jobs and better protect frontline services. Furthermore, by waiting until the end of February before setting a budget, the Council can also keep the pressure on the Scottish Government and urge them, even at this late stage, to rethink their cuts before they set their budget.
The Council has until 11 March 2016 to set a final budget for 2016/17.
Speaking at the meeting, the Council Leader, Ronnie Nicholson, made the following statement regarding the Council’s budget:
“When we agreed our three year budget last year, it was a budget that showed a clear determination to deliver on our priorities:
Building the local economy- including our ‘Youth Guarantee” –a guarantee of a place in education, training or job for every young person, within 4 months of them leaving school.
Providing the best start in life for our children- including new initiatives on Family Centres and school based Social Work provision, a School transport contingency fund as well as an overall increase in the education budget.
Protecting our most vulnerable- including a new comprehensive Taxicard scheme, extra help for those with dementia, a commitment to becoming a Living Wage accredited employer, investment in our region’s first ever Anti-poverty strategy as well as an overall increase in the Social Work budget.
Our budget demonstrated our commitment to being an inclusive council- with a budget setting process that included a comprehensive public consultation process.
The budget also set out proposals to deliver significant savings over the next three years. Taking what was seen by local government in Scotland as a ‘worse care’ scenario of cuts in the grant to councils of 1.6% per year by the Scottish Government, our budget outlined how we would meet the challenge of saving £32m over three years on top of the £40m which had been saved in the previous four years.
However, in what is the single biggest attack on local council budgets in a generation, the Scottish Government are proposing to triple the percentage cut in our grant for 2016/17 to 4.5%.
The extent to which local councils are being singled out for significant cuts by the Scottish Government is revealed by the fact that the UK Government settlement to the Scottish Government for 2016/17 has actually increased by 0.7%. Whilst I do not believe that increase is enough- and I do not support the austerity policies of the UK Government- what the Scottish Government are imposing on local councils is austerity max.
If the Council’s Settlement had moved in line with the modest increase in the Scottish Government’s budget from the UK Government, our Council would have received a cash increase of approximately £2 million rather than a reduction.
Unless there is a change of position by the Scottish Government when they set their budget towards the end of February, the savings target we must now achieve for 2016/17 is £21.193 million rather than the anticipated target of £12.584 million we set last year.
Fortunately, due to fact we did set a three year budget last year, we have already agreed £8.162 million of savings for 2016/17.
And because of the tough efficiency targets we set when agreeing that budget, officers have brought forward proposals for £3.054m of operational savings and efficiencies. A review of the budget model has also released £1.674m.
A further £1.186m has been identified due to the fact the service reviews we agreed have either found additional savings over and above the targets we set or they have been able to bring forward some savings from future years. Should members agree all those savings, this still leaves a £7.111m gap. Further savings options of £5.661m have been provided to Groups from officers, which if taken would leave an outstanding target of £1.471 m to identify.
Members could have agreed all those savings today along with any others they have identified.
However, as section 6 of this report highlights there are flexibilities open to members regarding the timing of our budget, particularly given the extent of funding reductions facing the Council and the lateness of the Government settlement.
It is my judgement and the view of the Administration that a number of the savings options that have been provided to Groups would be too damaging to our local services if taken.
As an Administration we are developing a number of alternatives that we believe will minimise the impact on jobs and better protect frontlines services. The council normally sets its budget in mid-February, for no other reason than it is traditional to do so. Legally we have until mid-March to agree the Council Tax, although for practical purposes the end of February is a more realistic deadline.
Given the impact some of the proposed cuts will have on local communities, I think the public would be appalled if we just rubber stamped the savings before us without spending day and night trying to identify less damaging alternatives. I presume that is a view shared by all Councillors otherwise they would have brought forward a budget for today.
By waiting until the end of February before we set a budget we can also keep the pressure on the Scottish Government and urge them, even at this late stage, to rethink their cuts before they set their budget. Our Council has until 11 March to set a budget for 2016/17; however the end of February is a more practical deadline.
I also believe that we must recognise that whilst the Scottish Government has only set a one year budget, a full 3 year Government Spending Review will be carried out in 2016. The impact of this on council funding is uncertain given the forthcoming election and the extent to which any future Government is prepared to use the new tax raising powers under the Scotland Bill. However, it is possible that there could be further very significant funding reductions.
I therefore believe that when updating the agreed three year budget this year, members should not only put in place a balanced budget for 2016/17 but a budget process for next year that starts to identify further savings for future years. We need to open a dialogue with the public and ask them directly- what services it is they want the council to stop doing. It is no longer possible to simply keep trimming services year by year. Sadly- the debate is now about which services will be axed.
As well as facing significant funding reductions when setting our budget, members will be aware that the Scottish Government has set a number of conditions on the receiving the substantially reduced grant from the Scottish Government.
The letter setting out the terms of the settlement to the President of COSLA, copied to Council Leaders, from the Deputy First Minister dated 27January stated that failure to meet part of those requirements would result in a reduction in funding that would be – quote
“Proportionate and apply only to that element of the funding for a specific measure that a local authority subsequently does not deliver as set out in the paragraph above”.
Spotting a loophole in the ill-thought letter from the Deputy First Minister, Moray Council asked whether this meant they could agree to his terms by letter, but if they then increased the council tax, they would only lose the element of funding associated with the council tax freeze.
The Deputy First Minister promptly wrote back changing his “make it up as he goes along budget proposals” and stated to Moray council they would in fact lose all their funding if they did not freeze the council tax. Although this contradicts his letter sent just 24 hours earlier and no doubt would be open to legal challenge, we should view the terms of the settlement as being part of an overall package. This means if our Council does do not agree to accept the full requirements of the settlement, the combined penalty would be approximately £12.2 Million (equivalent to approx. 20% on our council tax).
The first requirement is to freeze the council tax for another year. As we set out in our budget discussion document this has not been fully funded by the Scottish Government. In fact Dumfries and Galloway Council is penalised by the way the Scottish Government has allocated the funding to freeze the council tax because we have the lowest council tax on mainland Scotland. However, given the threatened sanctions, I believe we have no choice but to agree that any budget proposals that come forward from groups must contain a council tax freeze.
The second requirement is to maintain the national pupil to teacher ratio of 13.7. Clearly such an ill-thought out requirement is one we have little control over as an individual council. However, we know that if the national target is not met then the Scottish Government has said sanctions are likely to be applied against those councils whose pupil to teacher ratio rises during the budget period. Perversely this educationally illiterate policy means councils with pupil teacher ratios well above 13.7 can continue to keep their ratio above the national average but our own council must stay at 12.7. Again however due to the threatened sanctions I believe we should agree today that any budget proposals from Groups for 2016/17 should build in a commitment to maintain a pupil: teacher ratio of 12.7 or below.
Finally the third requirement is to make progress towards the living wage by paying social care workers a Living Wage of £8.25 per hour from 1 October 2016.
As a Council we are committed to rolling out the Living Wage. It was a motion from the Labour Group, even in opposition that led to our own Council paying the Living Wage and last year in our budget we successfully proposed action that ensured we became the first ever Living Wage accredited Council in Scotland.
However, the reality is the £3.8M allocated by the Scottish Government is unlikely to cover the cost of care providers paying a Living Wage of £8.25 per hour in a full year in Dumfries and Galloway never mind any knock on impact on providers of wage pressures caused by demands to maintain differentials. The allocation of funding is also a straight percentage allocation to each area with no recognition of the fact pay levels in Dumfries and Galloway are lower than most of the rest of Scotland , meaning it will be more expensive to meet the Living Wage in our area than in other better paid areas.
Consequently whilst any budget proposal cannot fully guarantees that this requirement will be met, I believe we should make a commitment to work with providers to deliver a Living Wage of £8.25 per hour from 1 October, ensuring that a fair and equitable distribution of resources is given to providers to achieve this.
I therefore wrote to the Deputy First Minister John Swinney before his deadline confirming that I will be proposing today that any budget that comes forward from Political Groups should clearly meets the terms of the settlement. I have also made it clear that this is due to fact that the draconian conditions he is imposing would mean he would cut services in Dumfries and Galloway by a further £12.2m if we did not adhere to those terms, on top of the £21.1m of cuts his settlement will already result in.
I am not prepared to allow the Scottish Government to make such further attacks on our local communities and services in Dumfries and Galloway. They are already doing enough damage. It is clear from the reaction across Scotland that the coercive manner in which the Deputy First Minister has imposed this settlement has all but destroyed the relationship between the Scottish Government and local councils and it will take very many years to rebuild any trust between central and local government.
In the meantime it is the communities of Dumfries and Galloway and indeed our own staff who will have to bear the impact of the cuts he is imposing. I can however give them this commitment. This Administration will work day and night to develop budget proposals that minimise the impact on job cuts- including maintaining our Council Policy of no compulsory redundancies and we will protect as far as possible front line services.”
At the meeting, Councillors noted:
• that whilst the UK Government settlement to the Scottish Government for 20161/7 has risen by 0.7%, the settlement to local government from the Scottish Government
• that the reduction in our revenue grant of 4.5% increases our anticipated savings for 2016/17 to £21.193 million.
• the requirements from the Scottish Government that in order to receive the full grant allocation our Council must:
o Deliver a council tax freeze for the ninth consecutive year;
o Deliver “shared priorities” in relation to Health & Social Care
o Maintain a national pupil to teacher ratio of 13.7 numbers and secure places for all probationers who require one under the teacher induction scheme.
• that failure to accept the full terms of the settlement would lead to a combined penalty of a further £12.2 million cut in our budget (equivalent to approx. 20% on our council tax).
And then agreed the following:
• that any budget proposals from Groups must meet the requirements of freezing the council tax, maintaining a pupil: teacher ratio in Dumfries and Galloway of 12.7 or below and commit to working with providers to deliver a Living Wage of £8.25 per hour from 1 October, ensuring that a fair and equitable distribution of resources is given to providers to achieve this.
• to convene a meeting of full council on 29 February to consider any budgets that meet those requirements and which have been consulted with the Head of Finance and Procurement by no later 2 days before publication and 5 days before the budget setting. Should there be any significant change to the Scottish Government proposals on the 25 February 2016 that it would be permissible to submit a revised budget proposal
• to also consider any proposals for an updated budget setting process to facilitate the identification of further savings for future years.
• to follow the example set out in Appendix 2 of the 2015-16 budget in that the Administration would engage with other Political Groups in good time for other political groups to meet the deadlines
