Q&A with Ian Duncan
0Ian Duncan is director of finance at Trafford Metropolitan Borough Council and president of the Society of Municipal Treasurers. He talks to Room151 about the challenges facing the sector, as well as his own authority.
Room151: What are the main challenges facing your members?
Ian Duncan: At the beginning of austerity, more than four years ago, it was planned that by now the (cost-cutting) drive would be coming to an end. However, it turns out we are still in the middle of it. As treasurers we like to have solutions to our budget problems early and with some certainty but coming up to the fifth year of austerity we are having to adapt to not being comfortable when we don’t have all of the answers.
Because local government has a track record of delivering, the expectation seems to be that we can continue to keep doing so. Our statutory duties haven’t changed but the resource base is declining. There is a lot of innovative thinking from individual authorities which will make a contribution to our resource gap, but it won’t make up for the sheer scale of the savings to be made.
R151: Are government initiatives helping such as New Homes Bonus?
ID: The difficulty commenting on government initiatives is that they are often going to benefit some authorities more than others. We represent metropolitan boroughs in the north as well as large councils in London. This means that it is not always possible to come to a uniform view about the merits of the New Homes Bonus but we can say it is disappointing that it was largely created from existing local government resources – and that is an issue for all authorities.
R151: How is Trafford coping?
ID: When things are tight you take sensible housekeeping decisions and for a number of years we have focused on efficiencies and tried to protect front of house services. Trafford has always been a low spending authority so now we are coming to the stage of what is the minimum we have to do from a statutory provision point of view. This means discretionary activities will have to be squeezed and they are often the most visible to the public. We are looking at what discretionary spending exists within mandatory services. The problem will come for a number of councils when all discretionary areas have been squeezed and whether we can still afford a minimum and safe level of service.
R151: Are you using joint ventures or standalone companies?
ID: We are currently out to tender for a partner to join us in a joint venture contract for waste and environmental services. We want to save a minimum of 20% on a budget of £16m. We have listened to the offers made and we will review those and decide how many we want to go into dialogue with. It is a time consuming process and we have had to find resources to pay for the procurement exercise – as a ball park figure we set aside half a million pounds – we hope to save £3m a year on a £15m budget so it is worth spending the money, but it is a lengthy process.
R151: Do you think the public will notice the reductions in spending?
ID: My instinct is they will suddenly notice. It will be interesting to see what happens in 15/16 and 16/17 when cuts start to bite further.
R151: Has greater control over business rates helped?
ID: The selling point of this initiative was that councils can share in the growth of business rates – we have been asking for that for a long time. However, we have now taken on a lot more risk – in this first year we have to assume there will be losses from the large number of appeals . These appeals can go back as far as 2005 and councils are now responsible for half of this cost even though the money we collected in those years was paid over to Whitehall at the time.
We can expect fresh appeals every year . You tend to find that the rating agents are encouraging businesses to make an appeal on a no-win-no-fee basis. An irony is that agents make FoI requests for information and use this to generate business for themselves by reducing a company’s rates bill which is at our expense.
The risk issue also applies to central government funding for council tax benefit support, where responsibility has been passed to councils. If there are more claims councils have to find the money individually. Previously, this was the government’s problem.
R151: Greater Manchester authorities are renowned for working together – is this helping?
ID: We are trying to encourage the further devolution of powers for skills, employment and transport. We are saying if you give us more responsibility collectively we will make the whole thing better. We have a good track record of working together.
The Greater Manchester City Deal had an innovative arrangement known as ‘earnback’ where economic performance will receive a financial reward to help pay for transport initiatives.
R151: Are municipal councils struggling in the low rate environment?
ID: I am not seeing treasury management as being the highest issue on anyone’s agenda. Councils are struggling with their revenue accounts but perhaps counter intuitively cash is not a problem. Some are looking at innovate ways of using their strength in the financial market to lend to develop health facilities in their area – there is a mutual benefit. Northumberland has done this and I know others are looking at it.
R151: Will you be looking at borrowing from the LGA’s proposed municipal bonds agency?
ID: In Trafford we don’t have a borrowing need. For municipal councils in general, I think the need is mixed – some authorities will be interested. It is an alternative to PWLB and there may be more certainty around the rate – we welcome more choice in the sources of borrowing.
