Budget speech 2015

Cllr Paget-Brown’s Budget speech Wednesday 4 March 2015

Madam Mayor,

I am very pleased to present the Budget for 2015-2016. I regret to say that whilst the national economic background has brightened considerably since my last Budget speech, the financial prospects for local government have not. Although we are now seeing impressive growth figures in the British economy, figures from the ONS show that the deficit remains high at £91bn with the accumulated national debt now at £1.49 trillion (just over 80 per cent of annual GDP) with interest payments to service it alone costing tax payers £48bn annually. It cannot be right to pass on this mountain of debt to future generations and the Coalition government – Conservative-led as the Opposition were once briefed to say – has made real progress in reducing our addiction to borrowing for today at the expense of those who will earn and pay tax tomorrow. Judicious reform of welfare and tax has seen the number of people employed rise to the highest it has ever been with unemployment falling to below six per cent. Those on the lowest incomes have had their tax bills cut – or been relieved from paying tax altogether. Just one per cent of the highest earners now account for 29 per cent of all income tax receipts. Inflation and interest rates are at records lows. That is what happens when you have a Government led by Conservatives who are practiced hands at clearing up the economic mess that Labour invariably leaves every time it has been in Government.

In Kensington and Chelsea we continue to face reductions in our grant and have now seen this fall by some £50m on its peak in 2010. Taking inflation into account, this amounts to a reduction so far of 23 per cent. Government funding now accounts for about 56 per cent of the Council’s spending, with the balance being raised locally from council tax, fees and charges, parking income and income from our property portfolio. We forecast that this will continue to a similar extent over the next four years. It is worth bearing in mind that local council tax only brings in around £73m or about 17 per cent of our total expenditure. Over the last 10 years we have restricted the growth in council tax to just six per cent compared with a national average increase of 21 per cent over the same period. It has been frozen since 2010 and in our election manifesto last year, we pledged to freeze it again – for at least the first two years of the Council. This is not because we are – as often caricatured a “wealthy borough” – but because we have had a prudent long-term plan to manage our costs and maximise alternative sources of income. Consequently Royal Borough residents enjoy the fifth lowest Council Tax in the country.

It is a sobering thought that the Mansion Tax favoured by the Shadow Chancellor is forecast to bring in £1.5bn or less than four times the amount of our annual expenditure here in the borough. Here is a tax which will have an enormous impact on long-standing residents who purchased their homes out of taxed income and from which the proceeds will be spent on nurses in Scotland. Kensington and Chelsea residents already pay high rates of income tax, stamp duty, and inheritance tax and here is yet another tax for which there will be no local accountability. I wrote to Mr Balls in October asking him to explain why he thought it was a good idea to penalise families who thought they had already paid their tax bills before they purchased property. What should they do if their only asset was their home? I haven’t yet had a reply, but I suspect his In-Tray may be rather full. It is also worth noting that the welcome changes to Stamp Duty announced in the Autumn Statement will place the onus on purchasers rather than occupants and will raise more from high-value sales. That is the sensible, Conservative, way to increase the share borne by those most able to pay.

The Council’s duty throughout the austerity years has been to ensure that the reduction in our grant funding has the minimum impact on the most vulnerable residents. Our two largest areas of expenditure are Children’s Services (including schools) which next year will account for £128.6m or more than 30 per cent of our total Budget of £418m, and Adult Social Care which accounts for £74.6m or 18 per cent of our total planned spending. We are now the only borough in London providing services to our older people assessed to have a “moderate” rather than “substantial” level of need. We should be very proud of this as it enables more people to enjoy independence in their own homes rather than relying on institutional care. It is receiving positive comments from residents along with our “People First” website. The model will be rolled out across the tri-borough.

We are also honouring our pledge to invest more in community safety, with £1.4m being invested in new regular police officers who will address particular concerns raised by residents. By April we will have in place one inspector, four sergeants and 36 constables whose priorities will be set at a weekly tasking meeting in which the borough will participate. Councillors with specific issues in their wards should pass these on to the Community Safety Manager and to Cllr Gardner.

If we want to protect those front line services then that means making real efficiencies elsewhere. This we have been doing. Not just with tri-borough (which has survived the change in administration in Hammersmith & Fulham relatively unscathed due to the judicious conclusions of the “Critical Friends” appointed by the new council), but also by reducing our own headcount, improving productivity and making our valuable landholdings work harder to generate income. That is why the debate over the Isaac Newton Centre was so important as it ensured that we got the best deal for residents and Council Tax payers. Rental income from Council properties now delivers around £9m annually to the Council.

In many places where the financial outlook is difficult there is an inevitable closing down of new activity. Not in Kensington and Chelsea where I am pleased to say that due to our policy of building reserves when there is an underspend or windfall, we have continued to invest in good quality new infrastructure. A brand new Leisure Centre which opened on Monday, the new Kensington Aldridge Academy currently serving 184 pupils – a figure that will rise to more than 1000 in four years time – Olive House Children’s Home and new school expansion at Fox, Marlborough and Barlby enabling us to provide top quality special needs education within the borough for the first time. This will continue.

There are those in this Chamber (and beyond) who attack our policy of building reserves and who would prefer to spend them propping up revenue budgets and ducking difficult decisions. But that is the economics of the madhouse. Data from the Office of Budget Responsibility shows that, in fact, local authorities across England and Wales have been under-spending against their budgets and building their reserves each year since 2010. Those levels of reserves have actually risen from 13.5 per cent of current spending in 2010-11 to 22.8 per cent last year.

In the current climate, non-essential subsidies will need to be reduced or phased out. That is what we are doing with OHP where I expect that we will soon be able to formally announce a move to an independent trust able to act without the constraints of the Council to raise money from commercial sponsorship and private donations. The annually subsidy which we have given to the opera for almost 20 years will gradually be phased out and the company will strike out on its own to cement its future as a key part of London’s cultural scene.

Kensington and Chelsea suffers from being regularly caricatured by those who don’t really know it. The reality is that this is one of the most diverse parts of London and contains areas where there are real needs. We should also remember that 52 per cent of residents were born outside the UK, that 38 per cent of residents describe themselves as non-British and that almost 10 per cent are Muslim. As Councillors we need to remember this diversity, set out to be inclusive and welcoming whilst not being shy of tackling the threat which a tiny minority of the population pose to everyone else. I believe that we should constantly seek to give people from every background the opportunity to succeed and to play a full part in the life of the borough and of London. For the most vulnerable and those in need, there should be focused support delivered in such a way as to minimise crises caused by late or inadequate intervention. In doing this, we need broad agreement on who the most vulnerable are and who is best able to deliver good quality services to them. I deliberately stress the issue of quality of service as this really matters and should be a proper concern of all those awarding and scrutinising contracts. Awarding sensitive contracts merely and only on price is a quick exit to the tag of average and ordinary and this in an area where we must do more to improve.

At Christmas we published our Vision for the next few years. In addition to protecting the most vulnerable, a key part of this will be to regenerate our housing stock ensuring that tenants can return to their neighbourhood, that leaseholders receive an attractive offer and that new homes are built to a high standard as an integral part of the neighbourhood – unlike their post-war predecessors. The Vision recognises that planning pressures continue to cause great anxiety and inconvenience to residents. We have therefore increased the strength of our planning enforcement team, worked hard to win approval for our policy of limiting basement extensions – for which I am very grateful to Mr Bore and his officer team – and we are now in the process of strengthening our conservation policies. Our challenge now is to ensure that different parts of the Council such as Highways, Noise and Nuisance and Enforcement are comprehensively linked up and are seen to be working together.

Since 2010, Kensington and Chelsea’s direct headcount has fallen by more than 25 per cent to just over 2,200 from more than 2,700. Some of this has been achieved through outsourcing services such as the Youth Mutual and facilities management and when that is discounted then overall employment is down by some 12 per cent – far less than the funding cut.

It has been of great comfort that we have been able to protect the quality of our services. The Annual Survey of Londoners show that 81 per cent of those surveyed were satisfied with our parks and open spaces compared with 77 per cent in 2010 and just 71 per cent in London as a whole. Satisfaction with street cleansing rose from 75 per cent in 2010 to 80 per cent in 2014 compared with an average of 56 per cent across London.

Repair of roads and pavements rose from 51 per cent in 2010 to 64 per cent in 2014 and contrasts with a figure of just 38 per cent across London as a whole. Delivering these services has sometimes involved changing the way we do things, combining teams, making sure that we use new technologies and managing risk sensibly.

Looking at the general levels of satisfaction with the Council these have also risen. In 2014 87 per cent of those surveyed by the Survey of Londoners believed that the Council is doing “a good job” compared with 83 per cent in 2010. For London as a whole that figure is 75 per cent. 80 per cent of those surveyed believe that London is efficient and well run compared with 77 per cent in 2010 and 68 per cent in London as a whole and the number believing that the Council provides “good value for the council tax that I pay” remains consistent at 64 per cent compared with 52 per cent for London. I believe that these figures, and many more available from the survey, suggests that the Royal Borough has managed this unprecedented and sustained cut in our grant with care and success.

I am going to single out two departments which have seen enormous change: Benefits where there has been a reduction of almost 15 staff but where performance has improved. More than 18,000 residents are in receipt of Housing Benefit alone and we also ensure that those who may have been affected by the reduction in council tax support are in fact fully funded. This is partly a result of welfare reforms, but also because of improved individual performance, a fall in sickness absence, more process efficiency and successfully designing a tri-borough Local Support Payments Service. Or look at the Council Tax Team where collection rates rose to their highest ever levels in 2013-14 despite a reduction in headcount of more than three people to 25.

The Budget supporting documents also show that we have kept a careful eye on unit costs. We need to know what we are paying for services, how this compares with other boroughs and to be sure that where we choose to spend more – for example on youth services or parks maintenance – that this reflects a conscious decision by the Council to allocate greater resources to services valued by residents. You will see various examples of this set out in Table 4 of the Budget Proposals document.

Yet again looking at the Labour Party’s amendment to this sensible Budget, they are determined to misdirect themselves about the way local government finance is heading over the next few years and to take chances with diminishing resources. Reducing contingencies, taking risks with our investments, inflicting further upheavals for those using special needs transport or play services, ignoring a major policy shift to provide top quality SEN provision in the borough rather than miles away, ignoring changes in patterns of care for the elderly that make extra care housing models more attractive, ignoring the recurrent problems and issues surrounding the powers and retention problems of PCSOs and worst of all a head in the sand approach to the financial storms that lie ahead whoever sits in No 11 Downing St.

Shortly the Cabinet Member for Finance will present the Capital Budget. This underlines our commitment to invest for the future in projects of benefit to residents and on buildings which will stand the test of time, add to the beauty of the borough and to the pride of those using them.

Madam Mayor I believe that we have a borough to be proud of that is an essential part of a City currently riding high in the world. I would like to thank my colleagues for the part they play in delivering this and the officers for their ability to pick up our political signals and to deliver the outcomes desired in these difficult times. This group is now honouring the pledges that we gave in last year’s manifesto. The way we run this place was put to the test in the only way that matters: the views of its residents. We passed that test very clearly with residents overwhelmingly dismissing the “spend now, pay later” alternative offered by the opposition. I believe that residents made the right choice when they trusted us with the task of running this borough in the interests of everyone. That is what we are now doing and I commend this Budget to the chamber.