Settlement date blues

Steve Bishop is Strategic Director for South Oxfordshire and Vale of White Horse District Councils

In the last few years the settlement – the Government announcement when we learn how much funding local authorities will get in the following financial year, has been issued in the first week of December. Before that it was the last week of November. Section 151 officers had got used to the settlement date being around that time and we could be forgiven for having assumed that it would fall roughly around the same time this year. Arguably, given the rapid pace of change and the need to get creative and do more with less, we might even have been given a little extra breathing space to crunch the numbers this time.

No such luck.

A few weeks ago we were tipped off in a conversation with a country treasurer and one of the ministers that this year the settlement date could be Christmas Eve. Fortunately things weren’t quite that bad but they weren’t very good either. The announcement came and we learned it would be the last day of parliament, the 19th December (parliament has to be sitting when the settlement’s released).

Every council I know sets its budget according to a timetable predicated on major milestones like the settlement date. Local government is so dependent on Government funding that any change in what the settlement makes available has a huge difference on our thinking when it comes to piecing together the budget for the next financial year.

The earlier we get the settlement, the more time we have before the statutory deadlines of setting budgets and setting Council Tax to work through the consequences of the numbers which will of course inform our decision making about where and how to make savings, both for the following year’s annual budget, but as importantly, for medium term financial planning.

The specific challenges it creates will vary from council to council but generally all councils have a statutory requirement to do budget consultations which will last for a period of time set out by a council’s own constitution. The two councils I work for have six week consultations (pretty standard) which means they need to start that process before Christmas in order to finish it by the end of January to propose a ruling group budget in early February which is then taken forward to a council meeting. However, the settlement is so late this year that we’ll miss the opportunity to do all the number crunching. It’s that number crunching that informs the advice we give to councillors who then go off and prepare their initial budget proposals.

So we’re all going to head off for Christmas not knowing what the funding deficit is going to look like and what the implications are the for the five year medium term plan. We’re not going to be able to go to the scrutiny committee on time and we’re not going to be able to meet our own constitutional budget consultation requirement.

So what’s to be done? Well like many councils I suspect, we’re working with our monitoring officer on having a shorter consultation period and, to be fair, we’re unlikely to see too much resistance from the general public there.

We’re also looking at generating savings ideas in advance of working out the funding deficit. So even though we don’t know how big the deficit will be, if we have an abundance of savings initiatives in store, even if ultimately councillors choose not to make use of them, we’ll be able to save ourselves time when we finalise the numbers. It’s putting the horse before the cart but that’s one way of dealing with the lack of time.

In reality, although we’re all expressing outrage about the settlement date, with hindsight, when you see the amount of financial reform that’s still being developed on-the-hoof and some of the very late decisions the Government is making (take Council Tax and business rates, for example), it’s no great surprise all that is delaying the government’s national funding calculations which consequently impacts our funding timetable.

Of course section 151 officers have been saying for a while now that the April 1st, 2013 implementation date for some of the reforms, like the business rates retention scheme, needs to be delayed. These are major changes – the biggest changes most of us have ever seen in our careers and there’s this growing risk that we haven’t got time to think through the implications of the national policy and how we implement that at the local level. There is a colossal shift of financial risk from central government to councils in the areas of business rate revenue and council tax support at a time of great economic uncertainty. Now is not the time for rushed policy formulation and implementation.

Some of the poorer councils with minimum reserves and scant resources have very little flexibility when it comes to coping with the unexpected so any rush in number crunching or proposing budgets this year could mean mistakes and mistakes might mean emergency borrowing, purely to stay afloat not too far down the road.

I hope to be proved wrong and will post again on this subject in January when the picture is a little clearer.