Pay more, get less: how council budget cuts will affect YOU
As HDC tries to deal with the coalition Government’s cuts, it is planning its own range of cuts, savings and increased charges amounting to �6.4million over the next four years on the �35m-a-ayear elements of its budget that are not ring-fenced.
YOU’LL pay more but get less.
Huntingdonshire District Council is having to cut more than 120 jobs, ditch its CCTV surveillance scheme, double parking charges and cut the opening hours of its call centre and leisure centres as it tries to deal with the large hwole left in its budget by the coalition Government’s cuts.
And while the Council Tax precept looks set to be frozen next April – it could rise by nearly 20 per cent the following year.
HDC is planning a range of cuts, savings and increased charges amounting to �6.4million over the next four years on the �35m-a-year elements of its budget that are not ring-fenced.
But that still leaves �3m of savings to bew found of the savings over the same time period. HDC plans to plug that gap with Council Tax increases.
The Chancellor said in his emergency Budget in June that he would give councils that froze Council Tax a grant equivalent to the product of an increase of 2.5 per cent.
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HDC feels obliged to go along with that in 2011/12 but threat of capping Council Tax increases is removed for 2012/13, and councillors will have to give serious consideration to a 19 per cent increase in the precept to get the authority’s finances back on track.
The 19 per cent increase would add 40p per week (�20.80 a year) for an average Band C Huntingdonshire home and around 43p per week (�22.36) for a benchmark Band D property, but it would still leave HDC’s precept in the bottom one-third of district councils.
In addition to substantial savings already made by the council, amounting to several million pounds over the past few years, service cuts and charge increases include:
• ditching CCTV surveillance from April 2012
• reducing country park maintenance
• doubling car parking fees from 2014
• charging for planning advice
• responding less quickly to requests for housing advice
• reducing call centre and leisure centre opening hours
• stopping grants to town centre partnerships
• making District Wide magazine electronic only
• increase licensing charges
• joint working with other councils and public bodies.
In addition, the council plans to lose 124 of its 800 staff, including seven of its 16 most senior officers, and may let out the headquarters office space they no longer need to generate additional income.
The council has set aside �1.9m to cover one-off redundancy costs.
Eric Pickles, Secretary of State for Communities and Local Government, has warned councils to expect average cuts of 7.5 per cent a year over the next four years, a total of around 30 per cent.
But, with protection promised for county councils’ education and social services budgets, the axe will fall harder on district councils. HDC believes its cuts will be heavily loaded onto the first of the four years (2011/12) when it could lose as much as �1.3m (11 per cent), which it will not be allowed to claw back in Council Tax.
There is an element of hope for the council, according to chief executive David Monks, in a proposed ‘new homes bonus’. This money – a reward for encouraging house-building in an area that is already one of the fastest-growing in the country – could be worth millions of pounds to Huntingdonshire, but it will be a while before anyone knows the details, and then the homes need to be built in a still-depressed market.
Trade union Unison said the proposed 125 (HDC says 124) job losses represented 15 per cent of the workforce.
“We think this will have a disproportionate effect on front line services, despite assurances from senior management that this will not be the case,” said branch communications officer Ric Euteneuer. “Staff have also suggested a myriad different ways that the council could save money.”
He added: “The real tragedy of the matter is that the people who suffer the most will be the vulnerable members of the community, whose housing benefits will be paid more slowly, who will stay longer in temporary or overcrowded accommodation for a move, and who will have to travel further to their local offices staffed by fewer advisers to deal with their queries.
“Additionally 125 fewer staff employed by the council will be 125 fewer customers on the High Street in Huntingdon and, given the fact that the vast majority of staff are local, up to 125 staff whose housing benefits, Council Tax benefits and unemployment benefits the ordinary tax payers of Huntingdonshire will be paying”
How HDC got here:
HDC’s Council Tax precept has been kept artificially low by raiding reserves.
Ten years ago, it had a treasure chest of around �80m, including �65m paid by what became Luminus when it bought the council’s housing stock in 2000.
That dwindled steadily as the controlling Conservative group used reserves to post zero Council Tax increases, even in the face of rising costs.
It had a bit of a change of heart in 2004, when the cabinet realised that, if it carried on in the same way, taxpayers would need to stump up a massive 56 per cent extra in 2009/10 when the reserves ran out.
So the next strategy was to increase the Band D precept by �1 a month for the foreseeable future.
It worked fine in year one, when the �12 implied a 14 per cent increase. This was because the increase in budget requirement was less than five per cent and the precept was below the district council average – the capping rules did not apply.
Assuming the same rules would apply to the following year, the council continued the policy, but the Government changed the rules retrospectively, capped the council at five per cent and required a re-billing exercise costing an unbudgeted �60,000. Since then the council has fought shy of risking another cap, so its precept is still miserly and the reserves are depleted year on year.
Another problem has been a system of ‘floors and ceilings’ applied to Whitehall grants to councils, which heavily penalised low-spending councils. They meant that, instead of getting the grant the Government said they needed, a proportion was siphoned off to cushion the effects of increases in profligate authorities – or those where social deprivation imposed greater costs on councils.
Cumulatively over the years HDC reckons it has lost �6.5m this way – almost as much as the �7.3m raised in Council Tax precept this year.
There are still �12m of reserves left to cushion the current blow, but it will cost �3.7m in 2011/12 to comply with the Government’s ‘request’ for a zero increase in precept.
Even with a 19 per cent increase in precept the following year, the reserves will ‘run out’ – meaning they will reach the minimum �3m below which it would not be prudent to allow them to fall – by 2014/15, after which they can no longer be raided and HDC must look fully to Council Tax.