A lot of friends, colleagues and others have asked me recently what I think about the County Council’s Draft Budget for the next financial year 2017/18 and whether they should respond to the public consultation.
The truth is, like any huge organisation, the budget and the services that it represents is very complex and the council themselves haven’t yet explained all the detail behind the particular sections and budget lines that were presented to the public when they announced their plans in December.
For the next few weeks myself and councillor colleagues will be looking into some of the details behind the figures in preparation for our formal response to the budget at the end of February. That however is too late for any members of the public to respond to the consultation, which I think closes on the 24th January.
Consequently I have gone through the draft budget and below highlighted some of the concerns I currently have. It may be that some of my concerns will be reduced as I learn more detail, but for now these I think are areas that need more scrutiny and could be of interest to the public.
I have offered a commentary to try to explain some of them based on the publically available documents and what I currently know. See below for the link to the draft budget as it was presented to the cabinet in December. I refer to the various appendix documents as shown in that agenda:
The budget aims to save an additional £67m a year and given that the council have failed in their attempts to save similar amounts of money year-on-year, there has to be some scepticism about their ability to be able to do this.
I have said before that if the council were a private business they would have been in administration a long time ago and given their financial track record a lot of people will probably not feel confident about their chances of managing savings next year.
The draft budget is based on a council tax rise of 3.95% although new Government rules will allow this figure to rise to 4.95% which will raise something like an extra 2.5m off the top of my head (see a previous recent blog post about the Adult Social Care Precept for more details about this).
I fully expect NCC to increase their proposed figure to the maximum 4.95% when they eventually set this budget in February. Before going into details, the first thing I’d like to say is that there are actually some things I would like to welcome from this budget. For some time I have called for a root-and-branch reform of the council’s finances and to an extent, this seems at last to have started.
I would like it to continue and go deeper, but they do seem at last to have pulled their collective heads out of the sand and come out of denial about their financial position. This has manifested itself for the first time in the acceptance that there is a structural budget deficit.
Up until now the council’s budgets have been wrong! They have said they would spend a certain amount on a service (mainly in Children’s and Adult Social Care that was clearly never going to be enough, and then spent the rest of the year overspending and trying to claw back the money from other places to cover this.
They have now used a method called zero-based budgeting where they have effectively gone back to basics with a blank sheet of paper and thought about what they actually need to spend to give the service they want to offer.
Surprise, surprise, they found that they were consistently underestimating the money they actually needed, and the difference that they had miscalculated is the structural budget deficit which they now need to put into the services to get them where they should have been in the first place. This deficit has been caused by continual under estimating of service demands and in particular about forecasting the number of future users and the cost of the service they need.
I actually take some personal satisfaction in this because I have raised this issue, particularly about under forecasting service demands, again and again for years. I don’t suppose the Conservatives have finally started listening to me, but clearly someone has had a word with them and I am pleased that the budget is now at least reflection that, although the forecasts for additional social care demands in this budget have to be questioned simply because they have been so bad about it in the past (more on that later).
Place Commissioning (Appendix H5)
The new County Council office block will have costed around £55m to build although the commercial value on completion was been estimated to be much less that, the 2017/18 budget refers to an additional new annual revenue saving or new income of £2m a year.
Whatever the details of that suggestion, some might wonder why this hasn’t been considered before given that this project has been ongoing for years. This will be one to watch in the future to see if these big savings will actually materialise, whatever they are.
FEES & CHARGES
Over the entire council, fees and charges are going to go up by an average of 2% but there will be wild variations because some are capped by law (parking fines etc) so others will be increased by even more. I haven’t seen a list yet, but clearly we are talking about above inflation rises.
HOME TO SCHOOL TRANSPORT REVIEW
Designed to save £600,000 a year this review will “remove any discretionary services” and also look at post 16 year olds education, so presumably offering only the absolute minimum level of service required by law and an increase in charges to these sixth form and college students that currently get help and could perhaps include those children with Special Educational Needs.
REVIEW OF FIRE SERVICE
£700,000 saving this year, an additional £500,000 the year after and even more in year three by which time we will be spending £1.5m less than at the moment.
I am not opposed to efficiencies and savings from imaginative new ways of workings, but clearly the budget has been cut year on year so presumably a lot of this has already been done. I worry therefore that any future savings may come from a direct reduction in service and even if this only means delays in response time that could mean lives lost!
Chief Executive Services (Appendix H1)
USE OF SOCIAL IMPACT BONDS
Another example where the council seem to have listened to Labour! We have been advocating this new kind of funding for a couple of years now to reduce some of the financial risk to the council.
Very basically, if NCC has a project with quantifiable aims, such as a campaign to reduce smoking for example as part of their public health responsibilities, they might spend half a million pounds on a project only for it to fail miserable and they would have then wasted that money.
A Social Impact Bond would provide that money from a third party investor and if the project failed, they would have lost their money and the council wouldn’t have spent a penny. But if it did work, and only if it did, they would get their money back plus a dividend, but this repayment would be funded by the success of the project and the future savings that would bring to the council. For example in the example I used if 50% of people in Northamptonshire stopped smoking clearly there would be huge savings to the council from not having to do so much work in the future.
Great idea, and if anything I would wish them to do more of it and if they want to take the credit for thinking it up, that’s fine with me, but we all know it was Labour’s suggestion in the first place.
UNITARY LOCAL GOVERNMENT
We now enter the realm of fairy story budgeting. I think everybody agrees there are some efficiency saving to come about by councils’ working more closely together. Whether that’s simply by co-operating better, creating unitary authorities to provide all services and however this may affect any regional Combined Authority agreements. But there are so many problems with this, and so many disagreements from all sides, not least because over the years the County Council’s relationship has been so bad with all the other borough and district councils, nobody has a clue as to what will happen and when.
The budget had allowed for £20m a year savings by year five and that figure is as good as any. The truth is you could just as easily say there will be no savings or there will be double or triple that amount. In a way it’s bizarre that it’s there at all given my previous comments, but as it doesn’t start to materialise until year four of the budget anyway, I’m not going to lose sleep over it at the moment.
CHILDREN’S SERVICES (APPENDIX H2)
This is where the really big money starts coming into play because Children’s along with Adult Social Care are by far the biggest expenditure for the council and have traditionally been the biggest areas of financial overspend.
Children’s Services have been a huge problem for years with damning reports from OFSTED, and the government having NCC under a microscope and ready to step in if the Council couldn’t crawl out of the position they had gotten themselves into.
We all know how important this area is and the many high profile national cases of children in care or supposedly under the protection of Social Services where things have gone tragically wrong have been of concern to us all. Consequently, over the last three years the council have had to throw money at this area to get themselves out of trouble.
Things are still far from perfect with some genuine concerns and worries. The service does now start to be stabilising but I’m not sure that we should be confident enough to start making big cash savings.
STRUCTURAL DEFICIT (23M)
This is the bit they got wrong before! You will see Conservative Councillors saying that they putting an extra £23m into the children’s budget which is technically true, but it does not mean they are spending and extra £23m which is what they are hoping you’ll believe!
It’s simply that they have been getting it so wrong over the years and overspending each year because of those mistakes. Regardless of that ‘extra’ money, there are some big ticket savings in this area and given my opening comments above, I think the public should be concerned and take an interest.
NEW MODELS OF CARE DELIVERY
Designed to save £6m a year by the time we reach year three of the budget and starting with £2.5m in year one. The narrative around this proposal simply argues for ‘new approaches to supporting young people…which will reduce the cost of complex care packages’. I have no idea what that means from that description, and nor do I have about the detail of following saving…
TARGETING EARLY HELP SERVICE CONTRACTS
This aims to save just under £10m next year and every year after that, by ‘right sourcing of services’.
Right-sourcing is the County Council’s spin-doctor phrase for out-sourcing and while I hope to have had the opportunity to have seen much more detail about this before the actual budget setting, my previous discussions with local organisations such as Kettering Home Start and Youth Works have already convinced me of the need for targeting early prevention work with youngsters and families who are at risk from severe problems later, either for themselves, but also for others such as the police and the justice system if they don’t get support early on.
This could prove to be one more example of the council trying to make short term savings that result in long term costs. In fairness, the council have a brand new Senior Director in charge of Children’s Services who comes with a good track record of work elsewhere and has already impressed me whenever I have met her, but I do worry that past mismanagement and the huge financial pressure she is being put under will leave her effectively with one hand tied behind her back.
Adult Social care (Appendix H3)
STRUCTURAL DEFICIT (24M)
Once again, please do not listen to anyone saying they are planning to spend an extra £24m on Adult social Care next year, it isn’t true! No one knows exactly what the overspend for this year is likely to be but I can promise whatever they do end up spending this year they will not be spending £24m more next year, or if they do, it will simply show that once again they have totally messed up their financial planning and demand forecasting.
DEMOGRAPHIC PRESSURES (EXTRA £3.8M NEEDED)
Nationally we have a growing population of older people who are having more and more complex needs and this is true in Northamptonshire more than most places. I know that, and the council know that, but the council has had a particularly bad track record of forecasting trends.
They have consistently got it wrong and then had to pinch money from reserves, from clever accounting methods, and for other services to make up the difference.
Looking at the size of the overall budget, this additional spend of less than £4m next year isn’t much, but if they have got it wrong again this will have a huge impact on whether or not they will be successful in balancing the whole budget. The reserves aren’t there anymore in the way they were, if this is underestimated it will mean cuts in service elsewhere!
There are some rally ambitious savings proposal in this year’s budget and it is the sheer size of them that causes concern with opposition councillors. If the items below don’t work they could end up with the council having a huge cost to put right which would simply continue the year-on-year tradition of overspending, but without at this stage any idea on how to fund that.
Serious stuff, not least because those that this involves are most elderly and vulnerable residents.
PURCHASING AND PLACEMENT SAVINGS
This is the brokerage system that has come in for so much criticism lately with some private care homes simply refusing to take part and deciding to have nothing to do with council clients, and from press reports taking out legal challenges against the council.
It’s designed to save £12m this year with additional savings on top of that each year for the next four years. In real terms, and allowing for the way local authorities show their accounts, this means that the council hope to save a total of more than £73m in the entire four year plan of the budget.
When you’re talking about these sorts of sums it doesn’t take much to add to the risk of it being undeliverable. NCC already pay care and nursing homes far less than the national average and often less than the actual cost of the care, with private clients in the homes being charged more to subsidise the council’s underpayment.
The council hope to save £8,750,000 a year by working more effectively with health partners. Last year they had to write off a £10m debt from the NHS because of contractual disagreements which does make me worry about working relationships, and we all know how badly other partnership working has gone in the past with savings not materialising.
It is right and proper that Councils and the Health Service should work more closely together. People don’t always see, or understand the difference between free health care and expensive social care, but both of these public sector organisations are underfunded and are consequently very protective of their own budgets. Until the government come up with some sort of integrated system, there is always going to be friction in any partnership working which can lead to budgetary pressures.
REVIEW OF OLYMPUS CARE SERVICES
I’ve saved the best to last in some respects, because the annual saving of £8.5m from this budget line gives me real concern.
Olympus Care Services is a standalone third-party organisation set up by the County Council to provide care services (400 care workers going to people’s homes as well as running some of its own care homes). It is wholly owned by the County Council, but technically sits outside their direct control with its own management etc.
It is hailed as a great success, both in service delivery and financially. Over the years they have actually made a financial surplus of millions which has been paid back to the council in the form of a dividend, and they are held up time and time again as an good example and a reason for the current big council plan of a ‘Next Generation Council’ where all services will be run by similar third-party organisations.
Why then are they planning to cut their budget by about a third in a “review of structures and utilisation”? The narrative in the draft budget goes on to say that following this review they “would look to retain and grow the service”, but by taking out such a huge chunk of funding surely they will be jeopardising the whole organisation?
They will certainly be jeopardising the jobs of many of the people who work there that will face redundancy and if OCS stop services who else will provide them? Will the council have to commission other (cheaper, not so good) providers, or will they simply not provide the services at all and leave people to fend for themselves and find their own care and support?
There are lots of questions around this one, and I have to be honest, the cabinet have not yet given the details which is another reason for me to worry.