28 November 2018

Budget proposals for 2019/20

Our budget proposals for 2019/20 complete a four year budget plan which has been designed to protect services for residents.

The budget for the year ahead continues to look at ways to invest in the city amid wide ranging reductions in government funding which are having an impact across the country.

Cllr Dan Yates, leader of the council, said: “This is a budget which brings together four years of financial planning and sets our city in a position to maintain services when many others have not been able to do so.

“We’re dealing with a huge pressure in terms of the ongoing drop in grants from central government combined with increased demand and cost of services we have to protect vulnerable residents.

“These proposals reflect a clear grasp of the financial situation combined with a determination to reinvest in key services for the good of residents across the city. We are still exploring all options to protect services further into the future.”

Reinvestment in the budget 2019/20 includes:

  • Children’s Social Care: £1.281 million to support increasing demand and costs of the city’s Looked After Children
  • Adult Social Care including Learning Disability Services: £9.786 million to fund changes in demand for physical, learning disability, memory & cognition, and mental Health services including increasing complexity of need and additional safeguarding costs
  • Money works: £0.200 million (£200,000) re-investment to provide continued support for the Community Banking Partnership and the council’s Financial Inclusion Strategy
  • Field Officer Service: £0.169 million (£169,000) re-investment to provide for the full ongoing running costs of the new service which has proved successful during its first year of operation
  • Welfare Reform Support: £0.260 million (£260,000) one-off funding to provide continued transitional support for those severely affected by Welfare Reforms including a Local Discretionary Social Fund
  • Homelessness and rough sleeping services have received grants to maintain resources of more than £7 million in the last year, including successful bids for national funding

Key points in the budget 2019/20 include:

  • Over the four year period the council has re-invested almost £56 million in meeting growth in demand and costs of services, particularly across social care services
  • The council has also had to re-invest funds to cover normal pay and price inflation of more than £16 million, together with managing the loss of Revenue Support Grant (see government grants section below) of more than £39 million
  • Total savings of nearly £69 million will have been delivered over the four year period to provide the necessary re-investment in services alongside taxation increases

Challenges faced in the budget 2019/20 include:

  • High levels of cost, demand and funding pressures across adults and children’s social care continue to have an impact. These are services the council must provide by law and which support some of the most vulnerable in society.
  • Explaining to residents how some parts of the budget are legally ring-fenced for specific use, for example, the council can’t spend the Dedicated Schools Grant on road repairs (more information below).

Budget council 2019/20

The proposals will be reviewed in the weeks ahead until all 54 councillors gather at budget council on Thursday 28 February 2018. This is when the budget will be voted on for the year ahead following debate by councillors.

The council provides more than 700 services that residents see or use every day, paid for by the annual council budget. The total budget for providing council services to the city’s population of approximately 300,000 people is currently £756 million for the 2018/19 budget.

Government grants

The Revenue Support Grant (RSG) from government will reduce to £6.5 million in the 2019/20 budget. Over the four year period this will have reduced by over £39 million. The council has made substantial changes in the way it operates to counter the impact of these accumulative reductions in central government grants.

Where our budget funds come from and restrictions on ring-fenced funds

Despite the reductions, the majority of the budget still comes from government grants. The cost of all services in the current 2018/19 budget is £756 million, of which Council Tax funds only 18%. This means that Council Tax provides less than £1 in every £5 of what we spend on running your services in our city.

The proposals are based on a presumed Council Tax rise of 2.99% which is the maximum increase allowable before triggering a referendum.

Spending on schools, housing benefit and council housing is ring fenced by law. Around 39% of the budget comes from government grants which are ring fenced for schools and housing benefit. About 7% comes from housing rents and is ring fenced for council housing.

In July this year we estimated the council budget gap for the 2019/20 financial year would be £11.6 million. The increasing level of social care pressures and a further reduction in the government’s education services grants has seen this gap rise to £14.2 million.

The proposed budget currently assumes a standard increase in fees and charges. This is a complex area, for example penalty charge notices (parking fines) are set by government and cannot be changed independently. The fees and charges for 2019/20 will be scrutinised and agreed by relevant service committees and incorporated in the final proposals going to February’s Budget Council. 

Balancing the budget

The council is legally required to balance the budget to run the council and operate services across the city. The budget gap from last year’s budget to the 2019/20 budget is estimated at £14.2 million, resulting from increasing costs and growing demand. To manage this situation we’re looking at further ways to save money so we can re-invest savings into essential services that people rely on. In this way, the council has reduced staffing costs as well as operational, contractual, legal and back office costs by over £93 million in the last five years. Further savings of £12 million have so far been identified for 2019/20.

Given the high level of cost reductions made in recent years, identifying further ways to save money has become increasingly difficult without impacting on service quality and availability so we are identifying innovative ways to provide services at lower cost, including redesigning services and bringing in new digital services.

A vital part of the budget setting process also involves continuing to support the city’s important community and voluntary sector. Over £35m is spent annually with Third Sector organisations in the area through a mixture of contracted and grant aided provision.

What happens next?

The Draft Revenue Budget and Capital Investment Proposals 2019/20 are coming to Policy, Resources & Growth committee on Thursday 6 December 2018.

The PRG committee papers are available to download from our website.

Budget Council is on Thursday 28 February 2019.

Find out about our budget, including a timeline for the budget setting process.