‘Not even spending all our reserves will balance the books’

We live through difficult times. Due to severe funding cuts from central government local authorities are being forced to change. Some of this change could be considered necessary – reducing waste or unnecessary spend and ensuring that the council delivers good services in an efficient way for the people of Bristol.

However, having made lots of those simpler savings over the past six or so years – Bristol City Council has reduced its revenue budget by £170 million since 2010 – we now find ourselves in the position of having to rethink what local authorities are.

Continually trimming budgets only results in the quality of services reducing across the organisation. We are now in a financial position which dictates that we must work differently.

We need to reinvent what the council does and its role in the city. We will continue to do things better and more cost efficiently where we can, but we have to accept that we won’t be able to continue to do all that we do today and we will work with the city in considering what can be managed or delivered elsewhere.

Our anticipated income in 2017/18 is £349 million. This comes from a combination of council tax, business rates and government grants. The chief government grant being the Revenue Support Grant. In 2014/15 the Revenue Support Grant was £110 million, in 2017/18 this will be £42 million. By 2020/21 this grant will be gone entirely. This will be replaced by a system of Business Rate retention.

Currently we retain 50 percent of business rate growth. From 2020/21 this moves to 100 percent retention of business rate growth. The final details of this scheme are still not known – for instance do those cities that currently pay in more than we receive in the current system actually get to keep 100 percent of the rates included, or will a system of top up/tariff continue?

Along with the other cities in the West of England Devolution Agreement we have signed up to a “no detriment” business rate retention pilot from 2017/18. This will enable us to have an input and help to shape the final scheme once it comes into force. 

At the same time as the central government cuts funding, demographic pressures in the city are increasing our outgoings considerably. On current assumptions in 2021/22 the cost of providing everything that we do today will be £483 million. Our expected budget envelope for 2021/22 is £391 million. That’s a gap of £92 million. This assumes that we implement the social care precept of two percent each year on council tax as well as implementing a 1.95 percent general increase on council tax.

We are challenging the assumptions in the £483 million costs and working through the detail to give as accurate a position as possible but, by any stretch of the imagination, this is a deep and difficult challenge and one that really can’t be understated.

The totality of these savings over the period 2017-2022 is between £335 million and £452 million (depending on if we assume council tax increases or not). This means that any plan to use reserves or sell off council assets cannot by itself deliver the level of savings required, although they will play their part. 

On top of this we have an inherited position which leaves us overspending by approximately £33 million this year. As you will know we have been working to mitigate this but any saving we make which is one-off, rather than recurring, increases that gap.  

We have commissioned an independent review (at no cost to the council) into what happened here which will report back at the end of the year. In the meantime we have moved the position of the chief finance officer (Section 151 officer) up to the senior leadership team (with no increase in pay!) enabling them to be in place at the inception of ideas, to help shape the decisions that the council makes with finance always in mind and to have the authority to make or break decisions from here on.

We opened a voluntary severance scheme at the council allowing those who were looking to move on the opportunity to do so. Also, we have moved from a three-year medium term financial plan that drops off after three years (leaving us with some of the problems we face today – budget gaps without a longer term plan) to a five-year plan which is refreshed annually.

We will be investigating working with our neighbouring authorities and other local public sector institutions to consider shared services, working through the City Office to see where we can work with our partners to deliver better outcomes for Bristol by sharing our resources, sharing our knowledge and skills and making sure we don’t negatively impact each other by our decisions.

With the other core cities, we are in contact with the government and making our case again and again for Bristol against an agenda which will hurt the city. We also propose to set up a government liaison team who will work on re-stating our opposition to this damaging agenda and the false economy of making short term cuts that have long term costs much greater than the savings. The mayor has met with Sajid Javid when he was in the region last week and emphasised the difficulties we face.

With all of this in mind we have a launched a city conversation and are holding a series of public events across the city; four public Q&A sessions, voluntary sector workshops, a consultation with business and there is a website which enables residents to have their say if they are unable to attend any of these events. We hope to hear from as much of the city as possible. This is a real opportunity for the city to play an active role in shaping how the council acts and what it prioritises and de-prioritises over the coming years. 

This is going to be a challenging journey but we will continue to do the things we were elected to do; we will build houses, work to tackle the traffic problems and congestion and combat the unfair and unjust inequalities that divide us and help us create a true city for all.

The link to the consultation on the corporate strategy can be found here.

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