Surrey County Conservatives

2010 Budget Statement by David Hodge, Deputy Leader, Surrey County Council

9 February 2009

Mr Chairman and Members:

At the last election in June 2009, Surrey Residents put their trust in this Conservative administration to ensure that:

· Value for money is the bedrock upon which this Council is run

· We set the lowest possible council tax for our residents

· We evaluate how services can be delivered differently and more efficiently

· We deliver statutory services for vulnerable adults and children in the most cost effective manner

· We support and provide care for children in need

· We provide school places for all Surrey children

In July 2009, this new administration under Dr Povey’s leadership and guidance set out our ambitions for this Council in our report, “Leading the Way”. One of those ambitions was to set out our clear intention to the Surrey taxpayers that the increase in Council Tax would not exceed 2.5% this year. We will continue to work for as low a Council Tax as possible in future years. Whilst also addressing our ambition to reduce costs by £180m over four years.

Today, everyone now accepts that we are in the most difficult financial climate that local government has faced for 50 years.

We also accept that the Government’s estimated public debt of £178 billion in 2009/10 will result in reduced funding for local authorities in the years ahead, as a new Government considers the next Comprehensive Spending Review in the Autumn 2010.

To help the Council address the challenges, the Cabinet has implemented a new approach to medium term planning. Our proposals include a budget for next year and planned budgets for the following three years. Although the outlook is uncertain and plans will need to be adjusted as events unfold, the proposals set a clear direction that places this Council in a stronger position to face the future than ever before.

This year’s grant settlement from the Government was in line with their plans announced in 2007 giving us a small increase in formula grant of £1.9m. But we were bitterly disappointed that the total Area Based Grant has been reduced by £1.6m giving us a net increase in Government funding of less than £300,000.

Mr Chairman, I am sure that many Surrey taxpayers will consider this a slight of hand by the Government …… particularly when they also take into consideration that over £300m of business rates from Surrey businesses are taken by Government and redirected up the M1.

I believe it is prudent to expect that the Grant floor funding of £67m will be reduced or lost during the next Comprehensive Spending Review and this assumption has been incorporated within our medium term budget plans. This, of course, will mean Surrey taxpayers will be funding 90% of Council spending from their council tax.

Since July 2009, a substantial amount of work has been undertaken by the Chief Executive and his team of Directors, the Finance Team and Senior Officers, supported by input from Select Committees, which leads me to confirm that, today, the Cabinet can honour the commitment we set out in our vision ‘Leading the Way’ and recommend a Council Tax increase of 2.5%, making this the lowest county council tax increase since it was introduced in 1993.

This Council faces huge pressures amounting to around £179m over the next four years in order that we can continue to provide care for the increasing number of vulnerable people in our society, meet the increasing costs of disposing of our waste and deal with unexpected events like the recent severe weather. We also have to build an additional 5,000 Primary School places and 1,000 Secondary School places, resulting in having to borrow capital funds of £145m to meet this statutory duty.

Despite these significant cost pressures, we will still find savings of £180m or more over the four year period. These savings will be achieve through:

· Imposing a wage freeze on staff salaries in 2010

· Reducing the use of Consultants: Consultants will only be used in exceptional cases and only after consideration of a business case outlining why the essential work needs specialist input, and clarification that no expertise is available in-house. Each consultant will have a start and end date.

· Undertaking a programme of Public Value Reviews over the next three years, achieving a Zero Based Budget, building quality assurance processes and ensuring our data is reliable and most up to date.

· Mywork is a project where we are looking to rationalise our office buildings, make our office space more cost effective, provide our staff with the latest technical equipment which will free them up to deliver frontline services and reduce their travelling time and cost to the Surrey tax payer.

· Investing to Save: We have allocated £12m over the next four years to fund a programme of Invest to Save projects that will, once implemented, deliver real value for money, improving service delivery while reducing long term costs, helping us to hold council tax at a low level and reduce our costs by £180m over the next four years.

Turning to Capital:

There will be a carry forward of Capital from 2009/10 of £40m as a number of projects have not been completed within the current financial year.

Mr Chairman, as Members will be aware, because Surrey is a Floor Authority, the Government fails to provide capital financial support for the County Council to provide enough Primary and Secondary School places for children in Surrey. In effect this means, the Council has to borrow £145m capital to build new schools and increase capacity at other schools. Surrey taxpayers have to fund this extra borrowing from their council tax, which is equal to 1% on council tax bills for the next 25 years.

The Government stopped providing funding support to Surrey for new School buildings back in 2006/07 at a distinct disadvantage to Surrey taxpayers. If the Government did fund this cost of borrowing, then Surrey would be able to invest that £145m capital in other areas, such as Highways.

A side effect of the Government’s Choice Agenda is that Surrey is a net importer of 2,500 secondary pupils and 1,150 primary pupils from London and surrounding counties. Because we have to offer these school places, we need to build more school places for Surrey children and Surrey taxpayers have to fund this building programme for the next 25 years.

Mr. Chairman, can I assure Members and Surrey taxpayers that The Leader and I will be making strong representations to the next Government in an attempt to change this deeply unfair system.

In all, we propose a capital budget totalling £0.5 billion over the next four years – a substantial investment programme but, due to the unfair funding position for schools, we cannot fund all of the schemes we would like. We have to be realistic and take tough decisions.

I would now like to turn to specific service delivery areas.

Adult Social Care

The Adults social care service continues to face demographic pressures with greater longevity of older people and an increase in the number of older children with disabilities needing support into adulthood. These pressures together with inflation, would add almost £29m to the budget next year; this is unsustainable. This calls for a rethink in the way services are delivered with a strategic shift away from nursing and residential care to more care delivered at home - this is what older people tell us they want and helps us to reduce our ongoing costs. We will extend self directed care, improve the management of more complex cases and implement more effective transition services for children entering adulthood. At the same time, we will make sure that we get value for money from our suppliers and improve our processes to ensure greater efficiency. Altogether, we have identified over £30m of savings for next year.

Children and Young People

Like the Adult social care service, the Children and Young People Service also face demographic and inflationary pressures. The costs of responding to the JAR and the impact of national legislation and legal judgements have also added significant costs. In all, the pressures amount to over £17m in 2010/11 with further large increases in following years. To address such a major challenge requires a complete redesign of the service. This will take time, so we have to propose a number of savings for next year in order to prepare for the more far reaching changes during the following three years. We have identified over £15m of savings by refocusing our resources on those interventions that have a real impact on the lives of vulnerable young people. We will also increase the efficiency and effectiveness of our services so we can reduce costs in areas such as transport. There are some tough decisions in the package but the safety of vulnerable children is our first priority and we must ensure that the resources we have are effectively targeted and where possible, delivered differently.

Highways and Transport

As we all know, the condition of our roads is a major concern for us, and many of our residents. This administration acknowledges that the roads are not in as good a condition as we would like and, given the limited financial resources available to the council, improvements will not be as rapid as we would wish. We have made huge improvements in the way we manage our highways contracts and those improvements have resulted in better value for money on the ground. We will be retendering the contracts shortly and expect further improvements in quality and value for money, building on the lessons that have been learnt. We have also completed our asset management plan which will help us target resources better. We have had the setback of the severe weather and have responded by allocating an extra half a million pounds specifically to fix potholes this year.

We have had to make some reduction in the capital budgets for highways but we believe that with improved efficiency within the budget we can use the funds available to better effect to ensure the roads will not deteriorate further. As I said before, Mr Chairman, if we did not have to borrow £145m to build new Primary and Secondary school places, we would be able to borrow that money to invest in our highways and other services. Savings on the revenue budget will be achieved through greater efficiency.

We have to improve the targeting of our support for bus services. Surrey is currently the highest spending county council on bus support and we believe that we can make significant savings while maintaining essential services.

Waste Disposal

The cost of disposing of our waste continues to increase. Working jointly with our partners in the districts and boroughs, we have made huge advances in reducing the volumes of waste going to landfill and are on target to achieve world class recycling rates. Our revised waste strategy will divert further waste from landfill sites, thus protecting Surrey taxpayers from the escalating costs of landfill tax imposed by Government.

Customers and Communities

Many of our community services rely on their own income generation. We have set ambitious, but achievable, targets for increasing income so that we can continue to provide a broad range of community services without putting too much of a burden on the taxpayer.

Some of our fire stations are old and no longer fit for purpose. I am pleased to tell you that our capital programme provides funding for the replacement of two of our oldest stations, which will improve working conditions for our firefighters and help the service modernise.

Change and Efficiency

We intend to reduce the costs of our backoffice functions as much as possible but we must not forget the vital role they play in supporting our frontline services. That is why we continue to invest in programmes such as MyWork and Public Value Reviews, which will reduce dependency on office accommodation. We will implement different ways of working, maximising the use of technology and enabling further possibilities for flexible working. Improved mobile technology will free social care staff to spend more time with their clients and less time travelling to offices. The Change and Efficiency Directorate plan to save over £4m next year and will reduce their budget by almost £20m over the four year period. Further large savings will be generated in frontline services as a result of process improvements.

Risks

Any budget that has to maintain statutory and essential services against a background of increasing demand and diminishing resources will contain an element of risk. To mitigate this risk, the Cabinet recommends that the budget includes an £8m contingency. The Council also holds un-earmarked balances of £17m. The Head of Finance and I consider these sufficient to cover the risks in the budget, provided there is sound programme management and close monitoring of all the actions necessary to achieve the proposals set out for each directorate. I will be establishing a stringent review and monitoring programme for the Medium Term Financial Plan and the change programme across the whole Council.

Staff – Their Future

This administration recognises the quality of our staff, their loyalty to Surrey and their understanding of the tough and difficult economic climate ahead.

We want to develop our staff skills both in specialist areas and in general management competencies. New working arrangements will present difficult challenges to management. To ensure successful implementation of the changes we propose, we will commit to the most extensive staff training programme the Council has ever seen. We have earmarked £4m to fund the programme, which we believe will ensure our staff are equipped and ready for the new challenges that Local Government faces in the years ahead.

Our objective is to ensure that Surrey County Council is fit for purpose. We will remove posts no longer required, look at all times to redeploy staff and allow natural wastage to reduce our wage bill in the future.

Agency Staff

This Council employs agency staff when essential, and when they are cost effective, in order to fulfil our statutory functions. Our ambition is to continually work with our Human Resource Officers and Service Directors to recruit our own social care staff. That is why we have promoted greater opportunities, with financial incentives for staff to be trained as social care workers, with the long term objective of ensuring that we always have high quality care staff in the font line of our services.

Whilst I am talking about social care staff, can I Mr Chairman, on behalf of this administration express our gratitude and thanks to all social care staff and spporting staff at the front line for their devotion to the care of those in need.

The Future

We will continue to set tough targets and work hard to hold Council Tax at a low level for the next four years. We have set a four year plan but we recognise that we will have to adapt our plans to respond to external influences. There are a number of key issues that may pose a risk in the future but, at this stage, we cannot be certain exactly what their impact will be.

These new risks include:

· The Personal Care Bill that is currently going through Parliament would impose an unknown burden on the Council. We would have to provide free home care services for a large number of clients. Government proposals for funding are inadequate to meet costs nationally.

· The future of the Building Schools for the Future programme is uncertain but there is likely to be a cost attached to whatever programme goes ahead.

· Concessionary fares are likely to transfer to the County Council in 2012. The current level of funding provided to the districts and boroughs is inadequate.

What Happens Next?

With the approval of this budget, Strategic Directors will finalise their 2010/11 detailed budgets and present these to Select Committees during the next cycle of meetings. Select Committees to provide feedback to Cabinet for final approval of detailed budget on 30 March 2010.

Mr Chairman: at the outset of this budget statement, I stated that this administration’s ambition was to: