Agent151: Oh good, more gloom!

Agent 151 is a senior local authority finance director and S151 officer. The agent writes exclusively for Room151 and is licensed to speak candidly

We finance directors are constantly scanning the horizon for trouble. This can be a source of amusement for some non-financial colleagues, who have been known to characterise us as Cassandras, Eeyores, and squirrels.

However, I must stand up for finance directors everywhere and say that without a good dose of gloom and doom at the right moment it would be impossible to manage the expectations of members, colleagues and residents. Indeed, I would go so far as to say an organisation without the right amount of gloom is heading for disaster.

It’s good news for finance directors at the moment because there is no shortage of reasons for despondency. Let’s start at the top with Welfare Reform. This is a major government policy strand that is running out of control. The so-called bedroom tax has ignited a good deal of resentment nationally for very little gain. You can only downsize if there are smaller properties to move into, and in overcrowded areas there are none. In areas that aren’t overcrowded under-occupation barely matters. Changes to benefit entitlements, and in particular the introduction of benefit caps, have already convinced many landlords to exit the benefit tenant market, and it is likely many more will follow when rent arrears become a reality. As a direct result, bed and breakfast numbers are climbing fast, and enforced migration of the homeless away from the areas where there are jobs is already beginning to happen in significant numbers. The direct payments pilots have been a disaster. Council tax collection rates will drop in many councils as a result of the abolition of council tax benefit. And Universal Credit has fallen dramatically behind its original timetable. What risk should we factor into our budgets for all that?

Speaking of budgets, of course the big question is how big a hit we will all take as a result of the Spending Review. The message from government seems to be that we should expect about the same level of reduction as we experienced last time – i.e. 25% to 30% over the review period. There is no doubt that councils, having already experienced more than their share of the pain last time around, will struggle to find ways of balancing their budgets without making major service cuts. Planning this will be difficult because with local elections in the minds of councillors, the last thing they will want to discuss right now is a major reduction in local universal services. Experience tells us that central government departments will find ways of passporting their cuts through to local government, so in fact we can look forward to rather more than the promised percentage in reductions. And let’s not forget that we wouldn’t be in quite so much trouble if government departments had been as efficient as councils and delivered on their original targets.

Population growth continues to drive up the costs of delivering social care. The number of adults in the system with complex needs is increasing, and their life expectancy is lengthening due to improvements in health care. Councils have developed efficient methods for rationing resources, but it’s not at all certain that these will deliver the level of cuts that will be required. Indeed, this has been the subject of a major campaign by the LGA. The number of children coming into the care system is increasing, due mainly to increased referrals from the police and other agencies that have tightened up on managing this risk. Sadly, the number of children staying in the system after referral is also increasing. The likelihood of finding significant efficiencies in children’s services is low because it is so very highly regulated, although the Troubled Families programme does offer a new approach.

Other sources of anxiety include pension costs, costs from levying bodies that appear uncontrolled, contract price inflation, the council tax referendum preventing council tax from increasing in line with inflation without major political ructions, the impact of public spending cuts on the local economy and employment (leading to increased demand for services and lower income collection for councils), and the risk of other government policy changes with equally severe consequences.

Excellent! Thank you to all of these things and their authors. Together you are making it easy for me and my finance director colleagues to do our jobs. Even the most intransigent optimist amongst councillors and officers has got the message about balancing the budget now. Thank you indeed. Where would we be without you? What’s that? Happy? Oh get away with you…!