Outgoing finance chief and deputy chief executive Chris Malyon warns that the recent mutation of the virus and lockdown creates “significant additional uncertainty” in his final year’s forecast for the county council.
Mr Malyon retires next month after a 40-year stint in local government.
Ahead of Tuesday’s budget setting meeting he says that to date additional costs and reduced income arising from Covid-19 have been met by the Government.
“It is therefore not an unreasonable assumption that any additional costs following increases to the infection rate and the national lockdown will also be funded through additional grant,” he says.
However, Mr Malyon believes that given the pressures on public funds “it is unlikely that the total funds available to local government will be dramatically increased”.
He says the budget proposals for Cambridgeshire are as robust as they can be at this point.
"Although a post-COVID-19 world brings with it a significant amount of economic uncertainty, the council does still expect that there will be further economic and population growth throughout the period,” he says.
“To date, the growth seen within the county and the consequential demand for additional services that this growth brings with it have not been adequately reflected within the grant distribution methodology.
“This point has been raised on a number of occasions with Government and was the foundation of the council’s 2018 fairer funding campaign.”
He hopes the issues highlighted during that campaign will be addressed in the forthcoming Comprehensive Spending Review.
And apart from a post Covid-19 world, Mr Malyon says there are “potentially additional issues that may arise from Brexit which, whilst mitigated by the securing of a trade agreement, have not been fully removed”.
Coupled with additional Government restrictions that will restrict the council’s ability to operate as commercially as it might have hoped for, he says the need for maintaining a reasonable level of prudent reserves “is as key now as it ever has been”.
The finance chief believes the uncertainties across all areas of public funding, means that future years could be challenging.
A council spokesperson said members would meet to set its budget for the year ahead, aiming to close a projected £9.6m budget gap, and agreeing a new five-year business plan – all under the shadow of the current global pandemic.
For 2021-22, Cambridgeshire is set to receive £645m of funding*, excluding grants retained by its schools. But its total expected spending 2021-22 - despite finding savings and additional income of £4m, will be £655m - leaving a £9.612m gap.
Further gaps are also identified in the next four years of the plan – based on information on the latest projections of expected demand pressures.
The costs of running the council have risen by £42m (6.9 per cent) compared to the last financial year. In particular, the impact of COVID-19 has led to increased challenges across all services areas but especially in adult’s and children’s social care which have seen increases in both the amount and complexity of need.
“A significant amount of activity has been undertaken to identify savings, efficiencies and income to reduce the current gap,” said the spokesperson.
“However, the opportunities to generate additional savings proposals without significantly impacting the delivery of services, the paper confirms, have reduced in both number and scale.”
Mr Malyon sets out a range of other options which remain available to close the gap for members to consider which include:
Increasing the rate at which base Council Tax is set – the government has confirmed councils have freedom to raise council tax by up to 1.99 per cent each year without triggering a local referendum. Each additional 1 per cent added to the council tax bill would bring in just over £3m per year.
Increasing the rate at which the adult social care precept is set. The council’s current business plan is based on the council being able to set an adult social care precept of 2 per cent in each of the five years that the plan covers to 2025 – 26.
Each additional 2 per cent added to the council tax bill costs the average Band D Council an additional £27.18 a year.
Use of the flexibility available around Minimum Revenue Provision (MRP) – extending the amount of time the council has to pay back money it is borrowing and thereby reducing annual cost of that borrowing. A restructuring of the MRP in 2015 led to the creation of the transformation fund.
Use of the transformation fund – money previously set aside each year to transform services across the council to work more efficiently and effectively for local residents. There is currently £23m in the fund.
Reduce service levels
A further option of using the council’s general reserve is also highlighted in the report – although at 3 per cent of the overall budget, the reserve is currently held at the minimum level which is currently considered prudent and therefore should only be used as a last resort to balance the budget.
Cambridgeshire County Council’s full council meets from 10.30 on Tuesday, February 9 and is live on their YouTube channel.
*The key sources of Cambridgeshire County Council’s funding are council tax (£323m), business rates (£64m), central Government grants (£136m) and fees and charges income (£122m).
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