Agenda item - Brighton & Hove City Council - draft budget 2017/18

The OPC to hear from James Hengeveld, Head of Finance and David Sargeant, Interim Director Health & Social Care.

James Hengeveld, Head of Finance (BHCC) began by explaining how timely this meeting was, as on Thursday central government would be announcing councils’ finance settlements for the next 1-3 years. The continuing reduction in funding was part of the last seven years of deficit reduction. Of the £760.1m in 2016/17 the biggest areas of spending had been schools (£183m), Housing Benefit (£154m) and Adult Social Care (ASC at £112m). A big share of spend on children was for ‘looked after children’. Housing spend is made up of ringfenced spend (known as the Housing Revenue Account – HRA) and spend on temporary accommodation. His slide on the cost of Brighton & Hove Services explained that where the income came from, with only 15% of revenue being generated by council tax. Most local authorities are in a similar situation and the pressures such as wage rises (including the impact of the Living Wage) and increased demands for services. So councils are lobbying government about the rising costs especially for ASC. It costs £2.1m every day to provide BHCC services. The key challenge is to save £51m over the next three years. The cost of ASC is expected to rise by £8m in 2017/18. The Improved  Better Care Funding was created by removing the New Homes Bonus. Health Services are also under similar financial pressure. The BHCC budget has to be set by 9^th March, but may not hear from government about certain issues until the end of January, leaving little time to consult and finalise.

James Hengeveld’s responses to questions.

A limited level of Downlands sales, a few farm cottages and plots, had taken place to match fund the Heritage Lottery Funding for the Stanmer Park project. The income raised had to be considered against the lost rent. BHCC owns around 11,000 acres and the desire to contain the management of this land prompted the establishment of the South Downs National Park.

The council has an asset management plan and there is constant assessment of assets, examples including investing in Hove Town Hall and selling Kings House. If assets are sold, examples include part of Western Road, this can only be used to pay off debt or invest in other assets. The assets could not be used to secure debt. He was not able to confirm if this could be done in the new joint venture with Hyde Housing. A large % of council reserves are held for specific purposes such as insurance liabilities. The biggest single reserve is the working balance of £9m held for absolute emergencies (representing four days expenditure). There had been reserves of £80-90m in the past but this has reduced to around £45m and these are reviewed to see what could be released.

Around 300 posts could be lost due to the budget, but a large proportion is expected from restricting recruitment and holding posts vacant rather than redundancy.

He confirmed that the cost of concessionary bus passes represented around 33% of the income raised by parking, with the remainder going to transport spend and collection costs.[ this statement was subsequently corrected in an email to Penny Morley. I was including income from the council owned car parks which does not relate to on street parking income and before allowing for any direct costs. On page 44 of the annual parking report for 2015/16  there is a table showing the income by source (for on Street) and the associated costs. This income less costs is far closer to the cost of concessionary fares.]  

A 1% increase in the Council Tax would raise £1.2m. While he did not believe that government would give local authorities complete control over raising Council Tax, there could be greater relaxations to enable them to raise more money this way. Wokingham was an example of an area with a high tax base but a lower demand for ASC services, so this was not the fairest way to increase resources.

He offered to raise the issue of quality checks on bus services with his transport colleagues, and John Eyles to raise at Environment, Sustainability & Transport Committee.

He was asked to provide a breakdown of the council’s statutory and discretionary spend. This could take significant resources and so will provide information which is possible.

 He confirmed that the cash collection company had been put in administration the council was unlikely to recover a significant part of the lost funds. This had been reported to the Audit & Standards Committee. Subsequently, with the wider introduction of Pay by Phone a significant amount of the parking collection to cashless payment.

He confirmed that BHCC receive back 100% of housing benefit expenditure, using regular reconciliations. Reports to Housing Committee show how the HRA is balanced.

David Sargeant introduced himself as the Interim Head for Adult Social Care ASC) and had been the Director of ASC in Surrey. There would be a new permanent head of service from the 3^rd January. The ASC and Public Health services were the only to see growth in BHCC budget, due to the growing level of need. This is unlikely to be generated by additional budgets so would need to come from increased savings and efficiencies. He had been very disappointed ASC had not been mentioned in the recent Autumn Statement, as had been hoping that council’s would be able to raise an extra 2% in precept and Better Care Fund was brought forward by a year. The situation would still be very difficult even if BHCC were allowed to raise an extra 4% from a precept, but at least it would be present in future budgets. Surrey had raised an extra 2% last year but needed 12% to break even.

He had been asked by the Chief Executive to assess the budget proposals and found the issues and solutions of BHCC to be similar to all other local authorities. They were protecting front line services and staff, improving efficiency while reducing costs, which was ‘. This was ‘just very painful’. He was impressed by the positive relationship BHCC had with the Clinical Commissioning Group (CCG). It was a risk as the CCG had historically funded a relatively high % of ASC in the city, so the CCG would need to find increasing efficiency savings too. This ‘tough year for ASC’ meant that fundamental changes were needed to how ASC and services for older people were funded. The changes from the Care Act had been largely abandoned until 2020. Local dialogue was needed to understand the scale of problems and determine solutions.

David Sargeant’s answers to questions

Concern was expressed at the meeting about proposed cuts to Youth Services and Ireland Lodge and Wayfield Lodge, the last 2 care homes who are the direct responsibility of the council and provided excellent services, such as for people with dementia. Could this have an impact on delayed discharges and respite care and what was being done by BHCC and the NHS to ease this issues?

David Sargeant explained that there was a joint review of services being undertaken by BHCC and the CCG. As needs are becoming increasingly complex, one needed to check if these services were fit for purpose and could enable quicker discharge from hospitals. A review of six homes in Surrey had resulted in the closure of 4, often because the fabric of the home was no longer suitable. Brighton & Hove needed to assess what it had, whether it was fit and how to share the costs. He had met with John Child of the CCG this am and felt that more work was needed on delayed discharges. It was key to look at prevention and stop people needing to go to hospital in the first place. A pilot scheme, Discharge to Assess, recognised that hospital was the worst place to asses people and it was better to assess them at home and offer them the proper support without creating dependency. This was now being rolled out to other wards. However Christmas and winter would also offer significant challenges. He also acknowledged the issues raised by the hospital being placed in special measures.

He explained that there would need to be a referendum in the city if the precept was not to rise by more than 2%. In Surrey, this was not considered politically to have a chance of being accepted, and it is felt that most communities would not vote to increase taxation to get more income for ASC, James Hengeveld confirmed that this administration was also not considering a referendum. Liverpool was suggesting a 10% tax raise to fund ASC, which was considered to be useful for lobbying purposes. There could be a 5% precept set next year without a referendum, and there could only be marginal gains if voted for a higher increase. A lost referendum could mean that there would be a three to four month wait which could incur even more savings needing to be made.

The OPC emphasised that reviewing services could have a significant impact on its users. It was unfortunate that savings sought for Community Transport did not recognise the importance of supporting people to do activities such as shopping trips, and its ability to reduce social isolation. David Sargeant emphasised the importance of preventing  people from becoming socially isolated, and the need to work with communities to help with this. The city needed to mobilise greater support from volunteers and the third sector. Other locations have taken on apprentices to take isolated people out. Useful volunteers could include dog walkers which would enable to people to have pets. There were many demands on community transport which was a very demanding service. Long term care packages were being reviewed as had tended to be run in a uniform manner. A greater flexibility of care was needed to offer support when most needed and then a lighter touch e.g. if in residential care. There had to be needs based assessments, which prevent issues such as people amassing a surplus of services which they then bank. One needed to ensure that money was targeted at those in the greatest need, who could be getting out of hospital or were deteriorating.

He acknowledged that financial pressures could mean that less money was spent on preventative services, even though the Care Act had meant to increase resources for preventative care at a time of greater life expectancy but more people with health conditions. We needed to be brave and work with the CCG to protect preventative budgets. The Better Care Fund contained a lot of preventative care work streams and these needed to be retained, especially as it took 2-3 years to feel their effects. He appreciated that the OPC recognising the support he had offered to them and felt it was beneficial to also have people working in local government with a medical background.