Alternative budget for Northants County Council

Yesterday I proposed Labour’s alternative budget ideas to the County Council. I had tried to address the ongoing funding cuts from the government by coming up with a scheme that would bring in much needed investment into the county and much needed money into the council to help them pay for the services they are otherwise going to have to cut.

The scheme centred around the council setting up a fund to encourage medium and large sized businesses to move into the county by providing building offices and factory space. The council would then in effect become landlords and benefit from millions of pounds worth of rent each year which could then be spent on local people. In part it relied on the fact that the council have access to relatively cheap finance which could be used to the benefit of firms who are desperate to expand but are having difficulty raising the necessary funding. A point interestingly made by David Cameron in a speech to the Chamber of Commerce last week.

Before putting forward this proposal obviously we did a lot of work with finance officers and allowed for the cost of the borrowing and paying it back and it still came out as not only a good financial investment, but one that would have given a huge boost to the local economy and job market.

The whole plan was totally costed and although clearly if it were agreed, more work would need to be done and a robust business case needed and we proposed the council worked in partnership with the Northants Enterprise Partnership to do that. On paper it stood up, and was certainly worth pursuing and it offered a totally different direction for the council to travel rather than just passing on the cuts from government which they are doing now.

The revenue from the scheme would have allowed us to invest in Adult Social Care, turn back on some of the street lights, and stop the proposed cuts to the Fire service among other things.

Unsurprisingly our plans were voted down, but not before they came in for a lot of criticism from Conservative councillors, mainly around the idea of borrowing money. Initially I thought they simply hadn’t understood the concept, as they seemed to be complaining that we were just intending to borrow our way out of trouble which of course was not the case and actually the idea was more like the sort of sound business suggestion you may have expected them to support.

I went on to explain this, and as I run a small business myself used the analogy that as business I would never borrow money to pay the monthly electricity bill, but I might very well borrow money to invest in my business to make it more profitable, so that I could then afford to pay the electricity bill. This is basic business and I didn’t understand why they couldn’t see the difference, and then I realised they probably could but it didn’t fit their narrative of the financially incompetent Labour Party who borrowed a lot of money and got us into this mess.

Luckily fewer people still believe that, but it’s still a message the Tories want to put out and the hope that if they say it often enough and loud enough, people will believe it. Although it’s ironic because since taking power at the Council, the Tories have increased the council’s debt to a new record high and left us with one of the highest, if not the highest, levels of debt of all County Council’s in the country. To be honest I doubt that many Conservative councillors even know that.

I had twenty minutes to make a speech about our proposals and the truth is I could have talked for two hours because there’s a lot of technical financial things I would have liked to explain, and maybe if I could have done I might have lessened their criticism, although I doubt it.

For a bit of fun I put in a couple of quotes about business from last week’s David Cameron speech but nobody seemed to notice, although I had a smile when a senior Conservative cabinet member spoke about that part of the speech and called it “socialist claptrap”.

Please see below for the full text of the speech.

We have been told time and time again that things have to change! That a lack of funding means we must do things differently, and we agree, we do have to change, and have new and imaginative thinking!

And we will be presenting a genuine alternative to the direction the council is moving and showing that actually, we can still support council services without going down the proposed route of outsourcing, which brings its own risks and jeopardises how services are accountable to local people.

The government has been sending a clear message to councils other the last few years that we need to be self-financing. Once again we have been presented with a budget that simply responds to government cuts with the simplistic approach of only looking at where we can cut money and without offering any real alternatives about how we can become more self-reliant.

Our proposals will therefore cover this as well as offering saving and expenditure proposals.

First of all savings and income:

(1) Business Rates

The administration’s forecast about the amount of business growth, and therefore business rates we will receive are, in the words of the officer who came up with them ‘extremely conservative’.

Given the unique position Northamptonshire has in the country with its central location and good transport links, and coupled with the recent improvements in the local economy that we have heard of time and time again in cabinet reports, we predict that we will receive an extra 1% in business rates and see this as perfectly realistic. We recognise that the Section 25 report states that this is optimistic, but taken with some of the other proposals in our overall plan, we are confident this is deliverable.

We deliberately haven’t, for example, made any further allowance for an increase in the amount of New Homes Bonus that may also be received as part of an increase in business activity.

Our plan also proposes that we pay Northants Enterprise Partnership 10% of any of this increase over and above the current forecast as an incentive. This is a means to maintain and strengthen our relationship with them.

We welcome the administration’s cuts to funding NEP which is what we had suggested this time last year. We are however reluctant to completely end our financial relationship with them, and although the amounts paid to them under our proposal will be relatively small we welcome the Section 25 report’s acknowledgement that this proposal ‘could have merits’.

(2) Cut in Funding to NEP and relocation of European Office

The proposed cut to NEP is £1.4m a year. We notice that £400,000 of that is due to be kept in-house to operate the ‘new’ European Office and to continue some of the economic development work that NEP had been previously undertaken on our behalf.

Given that the new budget for the role of the European Office is £200,000 which is exactly the same as it cost to run from Brussels, and officers actually only think it will cost £100,000, and that both NEP and Council officers agree that NEP will be able to continue to offer exactly the same service we previously funded, we see no reason why the amount of the budget cut that is to be retained in-house shouldn’t actually just be the £100,000 needed for the new office. We propose therefore to make a further £300,000 saving in the base budget.

We disagree with the section 25 report that this will jeopardise jobs and economic growth because when you look at the detail of our whole proposals you will see that the management of our business growth fund will generate more than of £1.4m over the plan, with this figure rising to £650,000 a year by the end of the investment period and we envisage this as being split between our own team and NEP..

(3) Waste Management

One of the main savings the Council intend to achieve next year is a massive £7m from waste management. This is to be achieved by collaborating with the districts and boroughs from a current budget of £27m. As yet the plans on exactly how to do this are flimsy and ill-defined.

We were told during budget scrutiny that this will to be done by a combination of 11 separate saving ideas, including the possibility of charging residents for visiting recycling centres, and with the reduction of recycling credits paid to boroughs and districts being only one of these options. However, in the budget it now looks as though this is pretty much the only option.

The view from the scrutiny process was that this was extremely unlikely to be achieved, and this view was echoed by the Waste Management Partnership who said in no uncertain terms that the suggestion of £7m straight away was impossible. They further said that if the Council were minded to go ahead as planned there would almost certainly be legal challenges.

They did however agree that savings could be made, and even suggested that even more could be achieved, but only if more time was given, not least because of the many contracts currently in existence with numerous private companies.

We therefore suggest only making half the proposed savings in year one, and increasing this figure progressively to £10m by the end of the five year plan and while we understand the implication in the Section 25 report that this saving has deliberately been made high to act as an incentive to get the Boroughs’ and Districts on board, we feel that this is a little disingenuous and we should be able to have a more professional and honest conversation with our partners and not just threaten them.

(4) Creation of Procurement Champion

Last year we suggested merging mobile phone contracts and predicted a modest saving of £70k, and despite being dismissed at the time, the council have since done it, and made savings of more than £300,000!

On the back of that success, and following advice from the LGA we are proposing to create a post for a non-executive Councillor to become our ‘Procurement Champion’. Their role will be to get involved first-hand with all matters relating to procurement. This is an example of best practice used elsewhere, and we have estimated the annual savings of this as being £235,000, although there is hope that this new way of working will actually bring even further savings.

(5) Business Growth Investment Fund

In Northamptonshire we are in a unique position because of our central location and transport links which have real appeal to business.

It is in all of our interests to encourage business growth and bring employment opportunities to residents, and with this is in mind we propose setting up a Business Growth Investment Fund allowing the council, working alongside NEP, to take the lead in attracting medium and large sized businesses into the county.

We all know that too often, lots of fast-growing businesses find it hard to expand because they can’t access the finance they need, and to this end will set up a fund of £120m to allow the council to acquire or build, offices, sites, and factories to the specific requirements needed to attract these growing businesses into the county or persuade them to move entirely from their current location.

If they need a new factory for example, but are having difficulty finding funding, we could step in. Ideally on land or in premises we currently own, but also with the possibility of us going to the open market.

In this way we will be able to take a proactive approach using our partners in NEP, and offer them an alternative to huge capital investment.

This will not only give us income from increased business rates but will importantly provide the council a much needed source of revenue for many years to come.

We can do this without increasing our borrowing limits and while it will obviously increase our overall debt, it needs to be recognised that borrowing money to build a new road is different from borrowing to invest and create a return on that investment. This will help us move towards the government’s aim of us becoming self-financing.

The benefits will be three fold. Firstly, extra income we wouldn’t have otherwise had. Secondly, massive job opportunities and a much stronger local economy, and of course the subsequent knock-on economic effects that will follow a large business moving into their areas.

If a factory opens on the edge of Northampton employing 200 people for example, lots of other smaller factories and businesses will soon open up around it to service it. In this way it will be a win-win situation for both the districts and the county. Rather than expecting reluctance on their part, it is far more likely they will be beating a path to our door and trying to get involved with this scheme.

Having said that, caution is still required and this will be a big project and we cannot expect instant success. For that reason we are planning this in increments with £20m to be made available each year for six years. We have also planned for the financial benefits to the council to come slowly and steadily and we prudently wouldn’t expect much return for the first couple of years but this will rise slowly with the measured release of the funds.

By the end of the investment scheme we envisage an extra £55m will have brought into the council with a net surplus of over £29m. With an ongoing annual contribution from then on into our revenue budget of nearly £9m a year, although if successful this may in fact be more.

Acting cautiously, we have not allowed for any additional funding that this proposal might bring in from either central government or the EU, nor have we factored in the knock-on effects for existing local businesses, or indeed any further increase in new homes bonus that this may stimulate.

We know there are a lot of established businesses out there wanting to expand. They are desperate to take that next step to becoming a medium-sized business, and often can’t as they struggle to get the finance they need to grow. This scheme will allow them to bridge that funding gap, allowing them to become medium sized firms, and it is medium firms who then grow to become larger firms.

And moving on to expenditure

(1) Street Lighting

Time and time the council have chosen to ignore concerns from the public about the impact the street lighting programme is having with regards anti-social behaviour and public safety. Many areas still have no idea exactly when they will get their new lighting, and still have a lot of lights turned off. We therefore to propose to turn the lights back on in the worst affected areas until the replacement programme has finished in a couple of years time. We’d only do that after consultation with both the police and the districts about the worst affected areas.

(2) Living wage

We propose to pay the living wage as a minimum to all our directly employed staff. This would mean that 170 of our lowest paid workers would get an immediate benefit but it would also stimulate the local economy. Lots of this money will be spent in local shops and businesses.

As one of the biggest employers in the county (at least at the moment) it also sets an example to other local businesses and encourages them to follow suit. Importantly, this would also go some way to helping boost staff morale, whilst helping recruitment and retention which in turn could lead to further efficiencies.

(3) Reinstating the Role of the Cultural Manager

We want to ensure the retention of the role of our cultural manager. The administration’s plans for this are not clear; there is a hope that some sort of grant funding will be found to keep this position, but no indication as to what will happen if that funding isn’t found. We would wish to carry on the search for grant funding, but are willing to put an amount into the base budget until such funding is found.

Locally have we already had the leader of Northampton Borough Council having been awarded the title of ‘Philistine of the Year’ by a national magazine and the last thing we want is for that reputation to filter across the road into this Council.

(4) Securing the number of Fire Appliances and Fire Stations across the County

For two years running we have been told the fire service is stretched to its limit, and despite that warning, further cuts are still planned over the next few years with huge cuts in year three and beyond.

The truth is that the administration themselves don’t know how they will cope in future years and everyone is hoping that a future government will step in to change the rules around what the fire service can or can’t do, and possibly arrange new funding deals.
The current budget proposal is to save an additional £750,000 from the Fire and Rescue Service next year alone despite the fact we already fund this service at 15% less than the national average per head of population.

As councillors, we all heard the very articulate and damming comments from a long string of fire fighters last week at cabinet. Their message was clear; future cuts will cost lives.

The fire chief admits that in the next few years if nothing changes fire appliances will go and fire stations will close. He is already planning a 25% cut in fire fighters through natural wastage over the next couple of years with a greater reliance of part-time staff.

In one of the fastest growing counties in the country this is nothing short of scandalous and presents a real danger to the people of Northamptonshire. For that reason we propose to put in an extra £1.5m worth of funding above the proposed budget, spread over next two years to immediately halt the planned reduction in services. This will give the Fire Service breathing space and the time to step back from these pressures and plan ahead properly. This will also stop the need to reduce the service’s response times while more measured planning can take place.

(5) Reversal of Sick Pay for first three days of sickness

A couple of years ago this council made the decision to cut pay for the first three-days of sick leave from all its employees. This has obviously had a dramatic effect on staff morale, and is regarded by many as a step too far. We note with interest that this cut has been deemed too much for either of our partners at Cambridgeshire County Council or Olympus Care for them to instigate. We wish to reverse this decision in an attempt to send a clear message to our employees about how much we value their contributions.

At the moment we have the ridiculous position where we may have two colleagues working for LGSS sitting next to each other with one getting paid for sick leave and the other one not.

(6) Pot Holes –Additional Investment in Road Maintenance

We recognise the continuing deterioration of our roads and have been dismayed that again and again this year the roads maintenance budget has been cut to make up the council’s overspending elsewhere.

We are currently at the position where parish councils are now being asked to fund repairs to their own roads, and some country lanes are simply being closed to traffic because we can’t afford to repair them.

We propose therefore to spend an extra £1m on road repairs every year over the five year plan.

(7) Apprenticeship Fund

We are proposing an extra half a million pounds into the base budget to increase the number of apprentices we have. This in turn will bring in extra funding for training programmes.

According to Learn Direct apprenticeships are a ‘tried and tested way to recruit new staff and to retain existing ones’.

We would also wish to ensure that a proportion of these apprentices are given to our looked after children when they come of age. We also want any contractors we use in Project Angel or as part of the Business Growth Fund to take on a proportion of apprentices, and again that some of these be from our own looked- after children.

(8) Adult Social Care

We recognise the extra money that has been put into the budget since the draft was first published in December, however realise that this directorate is one that will continue to come under financial pressure in the years ahead, not least because of an ever increasing local elderly population and the increasing costs of care homes, which of course is why we want to council to look at increasing its income in the first place, so we have the resources to meet this need for many years ahead.

In light of that we propose that an extra £3.3m is spent next year on developing new models on integrated health and social care as highlighted by the LGA who have recently promoted the example of how Manchester Council has done exactly this by working with community nurses, GPs, mental health and social workers to support patients at risk of hospital admission.

There is evidence to show that this leads to both higher satisfaction rates and an increase of numbers leaving the service with no ongoing needs, and to that end we propose that the Director of Adult Social Care devises a strategy to promote and pilot such a scheme on top of work already going on, as clearly any improvements we can make in this area will not only increase peoples sense of well-being and quality of life, but will also lead to future financial savings.

USE OF EARMARKED RESERVES

Currently the budget plans to reduce the amount of earmarked reserves we have available from £35m down to £24m over the five year financial plan. Our proposals will see a slight improvement in that figure with an extra £2m planned to remain in reserves.

IN SUMMARY

This is a credible alternative to the Administration’s proposals and Labour’s plan for Northamptonshire will:

• Attract businesses to the county and stimulate growth in the economy.
• Create jobs.
• Protect our heritage and culture.
• Improve the state of our roads.
• Ensure we maintain the current level of fire coverage.
• Turn street lighting back on.

I therefore propose the Labour group’s alternative budget.

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