The news that Northamptonshire county council was unable to set a balanced budget for the next financial year and was effectively bankrupt, did not come as a surprise to many in the local government sector. Other councils have warned they are approaching this crisis point and will overspend their budgets.
Getting local government budgets approved can be an obstacle course. Some of the services councils provide to local people are discretionary, such as libraries and swimming pools. Others, such as child protection and the safeguarding of older people, are statutory, so councils have a legal obligation to provide them.
But where budgets are concerned, none are spared the process of identifying where savings can be made. Year on year, central government’s move to reduce funding to councils means they constantly need to review the services they provide.
The process starts the summer before the budget is set. Managers spend weeks thinking up ways to cut expenditure and increase income in order to live within their means. Proposals are debated, costed, worked up in detail, argued over and finally put to councillors before being presented to the full council in March, ready for the start of the new financial year in April.
Every department has to present a detailed proposal, backed up by fully costed plans from each individual service, whether discretionay or statutory. It has become standard practice for department and service budget holders to present proposals for cutting costs based on three outcomes: best, most likely and worst.
Balancing the books is always difficult. Local authorities run the risk of community protest if they propose, say, closing libraries, making changes to bin collections or reducing the budget for filling potholes in the roads. Others may suggest increasing council tax to cover the shortfall in central government funding, but that comes with the danger of increased non-payment and the costs of debt collection. Introducing new criteria might restrict the numbers of people eligible for a service – but would also involve a great deal of administrative work, reviewing everyone currently covered and discounting those no longer eligible.
One of the biggest areas of budget spend is on residential care for older people. The council could refuse to increase the fee it is prepared to pay for residents to receive care, despite the claims of care home owners their costs have increased, due to a rise in the minimum wage. This course of action could mean more care homes going bust – and leave the council having to find new placements for homeless residents.
Once the pros and cons of each cut have been considered, the proposals are put to the cabinet, who will weigh up the various options on the table. Should museums be closed and collections mothballed, or entrance fees be introduced, and staff replaced with volunteers? If all the libraries can’t be closed, what about closing the less well-used ones, or replacing small rural libraries with a mobile service? Should funding to all community voluntary groups be withdrawn to stop further cuts in council services?
Local government officials want to protect their department’s services, of course, but no special pleading to the cabinet is permitted. Some services will be saved – child protection services, those services helping people with severe learning disabilities and older people suffering from dementia, perhaps – but this will be at the expense of deeper cuts elsewhere. Managers have been known to overstate the impact of cuts on their department in the hope cabinet members will look elsewhere for savings. Likewise, managers might underplay the impact of proposals they favour.
Inevitably, the pain will be shared and a messy series of unattractive compromises will be put to the full council as the most palatable options. Some libraries will close, some museums will be mothballed, residential homes will get a smaller increase in fees than they’ve requested, fewer potholes will be filled this year, and social workers will be replaced by unqualified staff.
It’s worked every year so far, but this time – even with an increase in council tax set to be adopted by 95% of authorities – some councils, as we have already seen, may find it impossible for councils to set a balanced budget.
- Blair McPherson is a former local government director of community services.
Looking for a job in central or local government, or need to recruit public service staff? Take a look at Guardian Jobs