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Budget Report 2006-2007
Leader of the Council Cllr David Gillett
Presented to Full Council 1st March 2006
My Budget Speech this year is written under the shadow of
great uncertainty over the future of Local Government and this
authority. A White Paper is due to be published in the Summer which
will probably contain proposals for a wholesale reconfiguration of
Local Government. We don’t mind any sensible debate that can result
in the improvement of services and value offered to the public but
that debate must start from a basis of common sense and not arise
from the pursuit of political ideology or motive.
The choice, when offered, will probably be between a
county-wide unitary authority whereby everything would be
controlled from Winchester with perhaps slimmed down borough
council offices delivering locally as satellites or the borough
would link up with one or more of our neighbours to form new
unitary authorities. The word is that nothing will be forced upon
us, in the same way that the Prime Minister promised that there
would be public consultation prior to Police Forces being forced
into amalgamations just like they have been in the North of England
and Wales without any public consultation.
I am saddened and anxious. Saddened that with all the effort
and pain we are going through to meet strict fiscal controls that
yet more external interference is plaguing our efforts to keep our
eyes on the ball to improve services and keep overheads to a
manageable level. Anxious that once more everyone involved in local
government are trying to do their best in a new atmosphere of
uncertainty.
More and more we feel we have little control over our long
term destiny. At one point the real test of democracy occurred at
the ballot box, the future of this Borough could be affected by how
the people voted, but that power is lessening annually as more
power which affects the lives of our residents is controlled from
the centre. The irony is that the Government are trying to raise
the public’s involvement and interest in local democracy, their
approach can best be described as tautology.
On the 5th December 2005 Phil Woolas MP, Minister of State for
Local Government, said in reference to the future of local
government finance "...Given the importance that we attach to
stability and predictability of grant". While another part of the
ODPM at the same time is making local government unstable and very
unpredictable.
This is the atmosphere in which we are all battling to provide
good affordable services to our beleaguered residents.
One way to counter the government’s current thoughts is
through an increase in authority cross fertilisation. This is
already happening at various levels and is already happening to a
degree through the Local Area Agreement (LAA). The various
partnership arrangements HBC have are working well and we are
exploring ways to widen this work.
External partnerships and arrangements will feature more often
on our radar, this development is unavoidable as we look closer at
neighbouring authorities to pool our resources and skills. Back
room amalgamations will be common place, they will have to be as it
becomes more and more uneconomical for authorities to retain
smaller units and the resources needed to support them. Local
authorities cannot all be excellent at everything, this is where we
need to support each other and share best practice and come up with
more innovative ways of working.
One of the best recent examples of this joint working has been
the work of the Partnership of Urban South Hampshire (PUSH). This
is a unique partnership nationally and has been held up as a
leading example of cross authority working, especially as there are
different political colours involved, working jointly for the
benefit of the sub region. So far the PUSH group has centred on
areas of the Economy, Housing and Transport/Infrastructure and has
produced the sub-regional strategy for feeding into the Regional
Spatial Strategy which was signed off today by the Regional
Assembly.
We are still looking at the focus of the sub-regional growth
being centred on the two cities with Strategic Development areas
being to the north east of Fareham and the east of Eastleigh.
Havant will have its own share to deliver but we have negotiated
the lowest housing growth in the sub-region with the exception of
Gosport. The urban capacity study has been revisited and the
priority for us will be brownfield and infilling sites. As I have
stated previously - the whole tenet of the sub-regional strategy is
that there will be no growth without infrastructure, this does not
just mean roads or rail but all that is required to create
sustainable communities.
At the heart of the strategy for the PUSH sub-region is the
need for economic growth. A strong economy gives life to our
communities without which they would perish. We are still running
behind the south east region as a whole in terms of economic growth
and the longer we leave taking positive action the further we will
fall behind. There are three key issues which have been
constraining economic growth within our borough, insufficient land
allocations for new and expanding industry, issues around skills
deficiencies and traditional manufacturing industries that have
switched to overseas production.
Our Regeneration Strategy and the newly adopted Havant Borough
District Wide Local Plan address these areas of deficiency through
allowing new land releases to bring in newly emerging industries
and comprehensive partnership arrangements for improving the skills
base not just of our younger citizens but for all ages through life
long learning programmes.
Already, there is increasing interest from the outside to
invest in Havant. We currently have major developments progressing
across the town and Liveability projects being delivered in every
major centre. The new Havant Town Centre Development Framework is
currently being consulted on and so far the response has been very
encouraging. At the recent News Business Awards Havant
businesses wiped the floor and we should be proud of all they do to
raise our profile and the spin off for existing and new employment
opportunities they provide. Companies such as Southern Electric
affirming their desire to consolidate their base here underpins
this growing and welcoming trend.
This is all good news but frustratingly we still have the
highest unemployment across Hampshire at 2.7% equalled only by
Portsmouth also at 2.7% and Southampton at 2.8%. It will take some
years for the improving skills agenda to work into the system so we
will still need a mix of employment types.
I used the word sustainability earlier and this brings one of
the biggest challenges, we still have net out-commuting running at
around 21% with approximately 11,381 travel to work journeys out of
the borough each week day. The busiest commuting corridor is
between us and Portsmouth; just under 6,000 Portsmouth residents
work in our Borough and we have 12,643 residents working in
Portsmouth. These are all unsustainable environmentally but we have
to live in the real world. Our new policies are aimed at addressing
this problem with the provision of new employment opportunities but
obviously it is a problem we can never eliminate.
One infrastructure issue that still hangs over us as a
hindrance for economic growth is the A3 bottleneck at Hindhead. On
1st December last there was a meeting between SEERA officers and
the Department for Transport and the Highways Agency at which the
issue was discussed at length. Funding of course is the key and
various PFi options were considered but now seem to be dismissed by
the Government. This leaves finance for the project to come from
the Regional Funding Allocation.
The public inquiry on the tunnel ended in December with the
report due out in the Spring but latest reports now indicate that
the earliest date that work would commence is during 2009. Local
MPs and Council Leaders are hoping to have a meeting with Alistair
Darling, the Transport Minister, to press the case for bringing the
start date forward.
All of these issues remind us just how much we are reliant on
the sub-region and surrounding areas and I am grateful to those HBC
officers who work in this field, much of which is unseen.
There is a huge frustration riding our backs at the moment. We
are starting to see the first shoots of our economic aspirations
breaking the surface, new optimism is starting to rise as economic
activity is moving up a gear all around us but we sit here in the
council chamber in the knowledge that we are taking decisions that
will mean that some council employees will lose their jobs.
In deciding how these difficult choices are to be made we have
used the Corporate Strategy and the council’s priorities of a
Cleaner, Safer more Prosperous borough as the yard sticks. This is
the first time we have really bitten the bullet to decide what we
should slim down doing or cease altogether. The service reviews are
only part way through and the remaining work will feed into the
budgets for years two and three of the target set for Management
Team.
In the past, to meet government savings requirements, we have
salami sliced budgets across the authority in response to Best
Value and the Gershon Report. This followed reorganisation which
took place when our Managing Director joined us. The reviews we are
currently and painfully working through is an entirely different
process to that which has gone before.
Early last year we could see the financial sword of Damocles
being raised above us and we took the very difficult but necessary
decision to instruct Management Team to save 10% off our operating
costs over 3 years. This was partly due to the knowledge that
capping would be imposed and the fact that the public have had
enough of high percentage Council Tax rises in addition to the
unswerving knowledge that the government will be supporting us less
and less year on year, in fact they have already announced a grant
increase for 2007/8 of just 1.6%.
Assuming that basic costs such as salaries will increase
somewhere between 2 and 3% and the already known increases in fuel
of up to 22% and put aside cost increases of other services and
supplies we rely on leaves one in no doubt that we will be up the
creek without a paddle. This is why we are having to make such
difficult decisions. Comparing our financial position with some of
our sister authorities leaves us in no doubt that we are
considerably the poorer relative.
There are three major reasons as to why we are in such a poor
position. Since 1994 Government Grant has reduced by £1.6 million
compared to the rate of inflation. Secondly, due to lack of
foresight and insufficient vision over many years this council has
seen fit to sell off assets to support capital programmes without
re-investing the proceeds in income generating investments and
Thirdly Council Tax increases of -3.4% in 1997/8 and -2.3% in
1998/9 have cost this council dearly. In fact had we been able to
increase the Council Tax by the rate of inflation only in those two
years we would now be better off to the tune of nearly £600,000 per
annum.
Ironically, Havant's share of Council Tax is relatively low.
If council support the budget proposals from the Executive a Band D
resident will pay £169.38 which equates to £3.26 per week which
quite frankly is good value for the 200 different services we
provide. Obviously, the average resident does not use all of these
services but they all have refuse/recycling collections weekly, the
streets swept, parks provided and play facilities for their
children, overall I believe this is good value.
The chart on the following page shows how the proposed Council
Tax is calculated and gives details of the charges levied by the
Police, Fire and rescue and County Council. You will see from this
that a Band D property will pay £1,253.07 in total, a weekly cost
of £24.10. As I stated previously, Havant’s share of this is £3.26.
The funding formula for government grant has changed, previously I
had a grasp on it but please don’t ask me to explain how it is
calculated now, I can’t keep up.
Follow this link to the
Council Tax calculation chart.
The following table shows Reserves and Developers Contributions.
The reserves are effectively our trading balances. Before anyone
gets excited and thinks we are better off than we have been letting
on let me explain that HBC collects Council Tax for all the
precepting authorities and forwards it to them on a monthly basis.
No matter how successful we are in collecting the money from our
residents and businesses we still have to pay the others the amount
they are expecting.
|
RESERVES AND DEVELOPERS CONTRIBUTIONS
|
31st March2005 Actual
|
31st March 2006Estimate
|
31st March 2007Estimate
|
| |
|
|
|
|
Revenue Reserves
|
£1,415,000
|
£1,400,000
|
£1,500,000
|
|
Insurance Reserve
|
£136,000
|
£180,000
|
£200,000
|
|
Capital Reserves and Receipts
|
£1,424,000
|
£3,000,000
|
£1,600,000
|
|
Contributions from Developers for specific purposes
|
£540,000
|
£720,000
|
£500,000
|
|
TOTAL RESERVES AT END OF YEAR
|
£3,515,000
|
£5,300,000
|
£3,800,000
|
Developer’s contributions are monies received under
arrangements such as 106 agreements and are held pending
commencement of the various works. The insurance reserve is held to
settle small claims against the council. It is more cost effective
for us to have a modest fund and settle claims directly than to
have separate insurance the premiums for which would be
prohibitive. This of course is separate from other insurances we
hold for larger claims such as employers and public
liability.
The following table gives a breakdown of how government grant
has changed over the years. I have attempted to gain a better
understanding of the huge variations year on year with the Head of
Resources and it would seem that you cannot easily compare one year
with another as different annual grants contain different
components and have had varied formulas for calculating net
grant.
For example the grant for 2006/7 appears to increase by 11.5%,
if only that were the case. In fact this contains the grant to
cover the cost of introducing concessionary travel which kicks in
on April 1st. We have yet to understand exactly how that will
affect our budget situation, as negotiations with bus operators
over costs, which are being run on a county-wide basis, have not
yet been completed. During the nineties some of the Council Tax
level increases incorporated a component hangover from the
Community Charge years which distort the statistics. Even this
years increase in the budget column seems a large increase on
2005/6, despite our efforts to reign in our costs this higher
figure reflects the increased turnover cost through the
introduction of concessionary travel.
I will though make one point which is significant. Had we set
Council Tax levels to the capping limits during the mid to late
nineties we would be much better off now. I am led to believe that
it was for political expediency but in the long run it ill served
the borough.
I would now like to briefly mention the Capital Programme. We
have struggled for some time to deliver the long shopping list on
the capital programme. The council’s own buildings estate needs
constant investment and maintenance and the list of desirable
projects across the borough to meet a whole host of aspirational
and in some cases essential works only seems to lengthen.
We have the proceeds from the Potash development coming in
soon and much of that is earmarked for essential maintenance work
and the rest of it is over subscribed in the capital programme.
However, I want us to revisit how the programme can be reviewed.
Earlier I was critical of a lack of reinvesting our liquidated
assets and tough though it will be we need to break the pattern of
grasping all the capital we can for various pet projects. Churchill
once said "many mistakes , no doubt we have made, for success is
the result of making mistakes and learning from experience" we must
NOT repeat the mistakes of the past. We have to look at innovative
ways to generate real income from astutely invested capital.
Speaking of assets there has been much talk and speculation
over the future of the Horizon Leisure Trust in recent months.
There are several causes for this but one key issue has been a lack
of communication, this lack has led to a breakdown in trust and
understanding, this goes both ways. In recent weeks I have taken a
direct approach by personally heading a new initiative of face to
face meetings along with Councillor Briggs and senior
representatives of the Trust.
Through these meetings we have been able to gain considerable
understanding of the issues and concerns and we are building
bridges to create a positive and co-operative atmosphere. Havant
Borough Council is fully supportive of Horizon Leisure Trust and we
are very appreciative of the efforts and contribution the Trustees
have put into the organisation for several years. We are mindful of
their personal concerns and are taking steps to allay these.
Our residents need the sporting and leisure facilities Horizon
provides and I can assure everyone that we will not take any
precipitive action that will force closure of the centres. Horizon
is a key partner in delivering the social wellbeing agenda which we
are all committed to, but like the Council, it needs to ensure that
what it delivers is value for money for the taxpayer.
The major challenge for both Horizon and HBC is how we will
deliver good value and cost effective facilities in the 21st
century. The council are currently reviewing our Leisure Strategy
for the next 10 years and more. This covers all forms of leisure
and sport and goes well beyond what we currently provide under the
Horizon flag. The shape and method for delivering these aspirations
is still being developed and we are looking at how we can fully
engage with the public in this debate. They are our customers, they
are our users and we need to ensure that our long term strategy
reflects their views and will be fit for purpose and
deliverable.
It is widely known that we have been considering the long term
future of the civic site and work is underway behind the scenes to
start this process. This work will consider the entire campus,
which includes the Leisure Centre and car parks. It will be an
exciting opportunity to consider redeveloping our leisure
facilities and reassess the facilities needed for the civic
offices. More members of the public go through the doors of the
leisure centre than they do the civic offices and we will need to
be totally open minded as to how we approach this work. Our target
is for these changes to happen in 5 to 10 years time and by this
time next year I hope the work will have moved on sufficiently for
us all to be having a very inclusive debate. I am confident that
the emerging Leisure Strategy will be able to inform that debate
also.
During the next few years the face of this Borough will look
very different. The key Liveability projects will have been
delivered making tangible environmental improvements in several
areas, the major redevelopments currently ongoing will be
completed. Developments such as Solent Road, Potash Terrace, The
Bus Station, the Langstone Garage Site, the Texaco site next to the
multi story car park, the Proctor and Gamble site in addition there
will be the commercial developments at the old depot site and
Dunsbury Hill.
There is a real tangible shift out there. It is a shift in
optimism, and we have actively set the cornerstone for a
revitalised borough. We have been taking tough decisions, decisions
that we know will not be popular. The most significant decision we
have taken is the switch to Alternative Weekly Collections (AWC).
We knew it would be difficult but we also knew we couldn’t avoid
it. Having seen for a couple of years the dramas unfolding in the
local press as neighbouring authorities were bludgeoned for
introducing AWC the prospect of us going down the same road was
challenging.
However, we were determined not to make the same mistakes as
the others and spent quite a while visiting them and learning from
them, ditching what was bad, and grasping what was good. In the
event, the introduction went relatively smoothly with the number of
formal complaints being unbelievably small at only a handful. I
believe that our success has been down to the sheer professionalism
of those staff involved and the sensible and logical way we went
about it.
As we enter phase two we have already learnt from the few
problems experienced during the roll out of phase one. We are
changing a couple of aspects of the early communications and
tightening up some procedures so I am confident that the level of
service we will provide will exceed that of the first tranch. Our
recycling figures are rapidly rising and we should hit our target
of 34% by next year.
Members, these are both exciting and challenging times for all
of us. There are uncertainties for individuals in this building
which is bound to affect morale and we are grateful to those
members of staff who have handled these difficulties with dignity
and stoicism, those who will be leaving also include some who are
taking early retirement and whatever the reason for moving on the
council thanks you all sincerely and wishes you all the best in the
future.
Colleagues, there are many other issues I could stand here and
talk about all evening, there is so much going on around us that
frankly I cannot mention it all. There is sadness, uncertainty and
challenge, but we have to look forward and in looking forward we
can see our efforts bearing fruit. Real positive change is in our
grasp and we must hold firm to the course we have set during the
last few years. This Borough is resourceful and resilient and the
Council will do all it can to press home the opportunities and
openings that present themselves as we all strive to make this an
even better place to live, work and play.
Members, I commend this budget to you.
David Gillett
Leader of the Council 1st March 2006.