We've delivered savings of over £48m in the last three years to address reducing government funding for services, and an increase in core service costs such as adult social care and children’s social care. Whilst this has enabled us to deliver balanced budgets each year, further work is still needed to deliver more savings as government grants continue to reduce in future years.
Further cuts on existing budget areas are becoming more and more difficult, so we're looking at other ways to deliver a more sustainable funding position, including bringing in income.
We'd like council taxpayers' views on proposals being taken forward for the 2019/20 financial year, but first, before we dive into the detail, it's important that everyone understands some background information on the council’s financial position.
The difference between revenue funding and capital funding
The council has two main types of funding, revenue funding and capital funding.
Revenue funding
Revenue funding consists of the revenue support grant, council tax, business rates, and other specific government grants and income. These funds can be used towards the costs of maintaining day-to-day services including social care, waste collection and disposal, highways maintenance and cultural and leisure services.
Capital funding
Capital funding, on the other hand, includes capital grants, capital receipts from sales of assets, other contributions and borrowing. This funding can only be used for capital projects and not to support the council’s day-to-day running budget.
Doing things differently
The main pressure on council budgets is within the revenue budget, so we're using our capital budget to develop some large-scale schemes that will deliver additional income or reduced costs. Also, it’s widely understood that investing in such schemes supports economic, housing and population growth, and offers a better return on investment than just keeping money in a bank. This should relieve the pressure on the revenue budget, meaning fewer savings are needed on the day-to-day running of essential services.
The following projects are just a few of those being developed using our capital budget:
- Purchase of the Shrewsbury shopping centres
The primary objective for the purchase is to support the economic growth and future vitality of Shrewsbury town centre. By securing a strong mix of future uses, it will also generate a sustainable year-on-year income stream for the council.
- Digital Transformation Programme
Our Digital Transformation Programme involves the replacement and enhancement of a number of IT systems and hardware used across the council. This investment will deliver more efficient ways of working and will reduce printing and postage costs, as well as delivering staffing efficiencies.
- Refurbishment of Shirehall
We'll shortly begin work on ‘stage 3’ of the project to refurbish Shirehall. There are a number of reasons for the planned refurbishment, including the provision of office space for council staff, a need to modernise and invest in the building, to generate revenue, to save on costs and to enable a greater commercial focus.
Council tax
In terms of funding, the main aspect we can influence is setting the council tax level for the next year. For 2019/20 we're proposing a 2.99% increase to council tax in addition to a 1% increase used specifically for social care. This is the maximum we can raise through council tax in this year and, if approved, will bring in £5.926 million to help us to deliver important services.
Services we have to provide
We're obliged to provide certain statutory services such as provision of care for adults, children’s safeguarding and social care, waste collection and disposal, and home-to-school transport for children aged 5-16. Whilst savings are delivered where possible within these services, to make them as efficient and economical as possible we must continue to provide these services and fund any increase in demand. These services make up a significant proportion of the council’s budget.
The need to fund these services does increase the pressure on other areas of the council that are considered discretionary. As we’ve previously mentioned, we're looking to find other ways of bringing new or additional income in so that these discretionary services can be maintained where possible. This may be through capital investments, through new income opportunities, by selling our services to partner organisations or through joint commissioning of services to deliver efficiencies between us and other public sector organisations. We look for these opportunities before considering cuts in services, but sometimes it's necessary for services to be cut where the budget is too tight.
Delivering savings
We're planning to deliver savings of £18.5m in 2019/20, and detailed proposals regarding these savings can be seen in appendices 2-9 attached to this page.
Full details of our budget build-up is shown at appendix 1 (also attached). These savings are not sufficient to close the full funding gap that we have in 2019/20, so we intend to use a combination of one-off grants from the government and earmarked reserves to balance the books. This isn't ideal as it only temporarily solves the problem and adds further pressure to the following year’s budget.
However, the funding situation for local government is due to change in 2020/21, and there is uncertainty over how this will directly affect Shropshire Council, in terms of the level of savings that will be required. Further detail is expected on this over the spring of 2019, and so further work will be performed on future years' budgets at that point.