Agenda item

The following question was submitted to the Leader of the Council by Councillor Michael Breslin under Standing Order 15 –

 

“Now that the referendum is over we know for certain that the Scottish public sector will take a £5bn cash cut in the 3 years 2016 to 2019. The only possible hope of avoiding this level of cuts was a Yes vote but the No voters confirmed this level of cuts was what they were content with.

 

The council leader is already on record as saying that there will be no school closures but with education being the single largest element of our expenditure, what does the council leader intend to do to prepare this council, and our education service, for our share of these cuts? Will he agree to start an all member discussion group on financial policy for the remainder of this council? Will he listen to those not in his inner circle or does he plan to do as little as possible and park the problem until the next council elections?”

 

Councillor Michael Breslin

20 September 2014 06:37

 

Response by Councillor Dick Walsh to question submitted under Standing Order 15 by Councillor Michael Breslin

Council Meeting, Thursday 25 September 2014

 

In response to the question put forward by Councillor Breslin and the view that he expresses, I wish to make the following statement. There are 4 key issues I wish to cover and these are:

 

·         The Council has a sound track record of managing its finances.

·        There are without doubt very significant challenges facing Argyll and Bute:

·        Beyond the financial outlook for the public sector there are other significant challenges facing our area.

·        How we address these challenges.

I will now address each of these issues in more detail.

 

The Council has a sound track record of managing its finances which provides a secure and stable platform for meeting future challenges and this can be demonstrated based on the following:

 

·         The Council has an excellent track record in managing its budget and containing expenditure within income.

·        We have a track record of dealing with significant funding reductions in a strategic and structured manner previously through our programme of service reviews.

·        In February 2014 the Council agreed a budget approach that would provide for a 2 year period of stability.

·        The budget is based on service achieving 1% budget savings over 2014-15 and 2015-16.

·        This will see the Council with a free General Fund balance of around £13m by March 2016.

·        It will also see the budgeted expenditure in 2015-16 around £1.4m below the level of funding.

All of this provides a sound basis for the Council meeting the very significant financial challenges facing the whole of the public sector.

 

There are without doubt very significant challenges facing Argyll and Bute and we already know about these.

 

·         Yes the Council faces a very challenging period post 2016 and this was acknowledged in the budget papers from February 2014 which set out the impact of reducing funding as a result of anticipated reductions in public sector funding but also as a consequence of the falling population in Argyll and Bute.

·        Furthermore the Council will also need to address the impact of specific cost pressures through changes to national insurance contributions and the impact of pensions auto enrolment as well as the service and cost consequences that arise from changing demographics.

The challenging financial outlook is known and factored into the Councils longer term financial forecasts.

Beyond the financial outlook for the public sector there are other significant challenges facing our area.

 

·         Our reduction in population confirmed through the 2011 census and the forecast of further reductions in population are of huge concern.

·        The work carried out prior to development of the SOA identifies the need to improve the economic performance of Argyll and Bute.

·        We have recognised these challenges in the SOA. Our overall objective is ambitious for Argyll and Bute.

·        To support this change through the SOA we will need to consider carefully how best we can contribute to drive change and successfully deliver on the objectives of the SOA.

This is why the Policy and Resources Committee has asked officers to investigate how the General Fund balance can be deployed and invested to support growth in the economy, jobs and population.

The critical issue of course is how we address these challenges and this will neither be easy nor straightforward.

 

·         We will need to consider carefully what the Council’s priorities are, what services it delivers, to what standard, how they are delivered, who delivers them and how they are paid for. This will have implications for how the Council allocates its budget.

·        Planning for growth is as important as cutting expenditure to meet reduced funding levels.

·        It is essential that all members are involved in making these decisions and I will bring forward proposals on how that can take place.  However we must be clear that also means all members need to take the opportunity to respond and contribute positively and engage in this process.

Councillor Breslin refers in his view, to a £5 billion cash cut over the period 2016 to 2019. Before commenting on that it should be remembered that the people of Scotland did not vote yes or no to express a view on whether they were content or not with the scenario outlined by Councillor Breslin. The solemn decision made by the people of Scotland and Argyll and Bute was far more complex than the simplistic position outlined by Councillor Breslin and I have no doubt that all who voted considered the consequences of their vote very carefully.

 

Whilst a consistent picture of reducing public sector funding is clear from current forecasts it should also be borne in mind that there is a UK General Election in 2015 and then election in the Scottish Parliament.

 

The figure quoted by Councillor Breslin as a £5bn cash cut is not consistent with those coming through the Chancellor of the Exchequer’s Autumn Statement from 2013, the 2014 UK budget nor from the office of budget responsibility. All 3 forecast a slight rise in UK totally managed expenditure but a reduction in departmental expenditure limits. All 3 forecasts suggest the reduction in Resource DEL (day to day running costs or revenue budget) will be around 8% to 9% from 2013-14 to 2018-19. Based on a Resource DEL for Scotland of around £25 billion this it would suggest is a reduction of considerably less than £5 billion between 2013-14 and 2018-19. A cash cut of £5 billion would be equivalent to around a 20% cut comparing 2013-14 to 2018-19.

 

Councillor Breslin then asked a supplementary question which was responded to by the Leader.