17 February 2011

My budget speech to County Council

Can I start by thanking everyone involved, the staff, public and Member colleagues, in the hard work that goes into the production of a budget in an organisation the size and scale of Kent County Council.  Particularly the Finance Team, led by Andy Wood, who have again done an absolutely superb job in presenting the budget for us today and I hope Members and the public will like the new format in the way that the budget is laid out in our endeavour to be as open and transparent in the way £2.4billion worth of public money is spent by this authority annually.

We should not underestimate the size and scale of the ‘ask’ placed upon us following the Coalition Government’s recent Comprehensive Spending Review.  10% or £95million from our net controllable budget of roughly £1billion (excluding schools) and a further £65million to come in savings the following year is a most enormous and amazing mountain to climb and a challenge ahead of us.

I must say, I get enormously irritated by the national press who make light of the scale of the pain imposed upon Local Government following the Comprehensive Spending Review and in addition to the significant savings that have been imposed particularly on the South East over recent years, I believe that local government has taken the greatest extent of pain across all the public agencies.  Many seem to think that if we paid our Chief Executives £10,000 or £20,000 less all our problems in local government and financial woes would be solved including today’s Telegraph editorial which is suggesting elected members are given totally unnecessary and bloated allowances.

So back to the challenge - £95million for the coming year followed by the £65million worth of pain in the following year. How have we delivered this challenge? 
In a nutshell, for the coming year:

• £38m delivering a leaner, fitter organisation
• £6m from additional income generation
• £15m temporary use of Reserves
• £36m against service changes and modernisation

So, if I can start with these headings, the use of temporary reserves speaks for itself. The leaner organisation – what does it mean?

It means that we will have to significantly reduce the staff numbers over the next two to three years building on the savings we have already announced as we restructure the senior levels of the organisation, saving, on a like for like comparison of that top level of the organisation, some £750,000.

Staff reductions are not easy for any of us and we will do all we can in the coming months and years to reduce compulsory redundancies as far as it is possible.

This administration is enormously grateful to all our staff for the restraint they have shown in pay negotiations and I very much hope that this will continue.   A 0% pay settlement for two consecutive years is very difficult particularly when inflation is running at around 4%.  The pound in all our pockets is shrinking both in the public and private sector.  But we have to look at the big picture - £95m this year £65m the following year - a total of £160m has to be found in these difficult and challenging times as Kent County Council does its bit to restore this country’s public finances.  In addition, changes to the essential user and lease car schemes are causing quite understandably anxiety amongst our staff and I am working with Amanda Beer and Roger Gough to try and do all we can to reduce the impact of these changes as far as is possible.  Roger I am sure will expand on this in his contribution today.

The significant reduction in grants to voluntary and charitable organisations has been under the national spotlight over recent weeks – we have in Kent, I believe, approached this reduction intelligently and sensitively and I am sure Graham Gibbens, Mike Hill and Sarah Hohler will again be referring to how they have minimised the impact on this vital sector that so many residents in Kent depend upon.

Our new £5m Big Society Fund will help support and grow voluntary organisations/social enterprises and stimulate entrepreneurship – as the State shrinks and monolithic structures are broken down – big new opportunities arise and we must maximise on this, creating new energy and innovation particularly applicable to the fast changing world in education, health and social care.

Moving to income generation, there is no escaping that some charges will increase to help to deliver that additional £6m off the bottom line. Although, a significant contribution will be made by increasing our enterprising and entrepreneurial trading activities to boost our income.

In Social Care Graham Gibbens has introduced modest increases much of them in line with increases in National State Benefits.

On transport charging we have had to make some tough decisions but I am pleased to say that Bryan Sweetland will be announcing some amendments to the Budget Book on subsidised bus routes.  The increasingly popular Freedom Pass which costs the authority some £10m will see the charge on recipients increase from £50 to £100 per year but I am pleased to announce some further relaxations.  Looked after children will pay no charge whatsoever and we are extending the entitlement up to the age of twenty years of age for looked after children and young people and including in that young carers in the age range of 11 – 16 will have free entitlement and those on free school meals will have their charge frozen at £50.

There will be a consultation on a 50% charge for school denominational and selective transport which if carried out would start to operate from September 2012.

And so, finally to the modernisation savings. These are intended to deliver, as far as is possible, more for less.  Evermore rigorous procurement will be the norm. In Highways and Waste for example, there will be a major focus on roads maintenance, roads maintenance, roads maintenance and other peripheral activity will reduce. In Waste, we will continue to drive forward the substantial savings that have been delivered through the innovative East Kent Joint Waste agreement with four district councils and it is our intention to spread this more widely across the county, delivering additional, significant savings.

In Adult Social Care we will continue to improve the quality of care delivered – particularly focussing on the private and voluntary sectors who, on many occasions, can deliver better for less which is the intent as we reduce KCC’s delivery and exposure in residential care.  Continuing our endeavour to maximise our Supporting Independence Programme across the piece. 

In Education, massive changes are ahead as substantial school improvement and support grants are dramatically reduced.  It will be essential to harness the enormous power, innovation and creativity within our 600 schools in Kent enabling them to work closely together through our new Society of Kent Schools, a community of schools working together for the collective benefit of the communities they serve.

Schools and their revenue budgets are not entirely protected.  The one and half per cent Minimum Funding Guarantee will soften the blow but 1.5% in a typical secondary school budget is still a potential loss of £75,000 and the full year effect of the last year’s teachers’ pay award and rising energy costs will take their toll over the year ahead and the reduction in devolved capital allocations is really substantial for all our schools.

Our ambitious Medium Term Capital Plan continues as we complete our commitments and promises made in previous years and I am delighted we have found that additional head room to fund £20million worth of additional capital investment in working towards completing and implementing our special school rebuilding programme after the disappointing withdrawal by the government of the Building Schools for the Future programme (but the less said about that today, the better)!

So, the change programme that has already started will be demanding and challenging. It will not be easy but I genuinely believe that we have laid out, set out before the Council today, an intelligent, deliverable, innovative budget and I commend this to the County Council.