Meeting documents
Cabinet
Wednesday, 6th May, 2009
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Bath & North East Somerset Council |
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MEETING: |
Cabinet |
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MEETING DATE: |
6 May 2009 |
AGENDA ITEM NUMBER |
13 |
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TITLE: |
Economic Downturn - Council Response |
EXECUTIVE FORWARD PLAN REFERENCE: |
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1987 |
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WARD: |
All |
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AN OPEN PUBLIC ITEM |
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List of attachments to this report: Appendix 1 - Economic downturn report March 2009 Appendix 2 - Action Plan |
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1 THE ISSUE
1.1 Cabinet is requested to consider the Council's response to the economic downturn taking into account:
- its priorities as set out in the Corporate Plan
- impacts of the downturn on its services and budgets both now and in the future
- its role as community leader and the associated role of the Local Strategic Partnership (LSP)
2 RECOMMENDATION
The Cabinet is recommended to:
2.1 approve the action plan attached to this report
2.2 note the actions referred to in the report which have already been reflected in the updated corporate plan and service action plans
2.3 recommend that Overview & Scrutiny Panels review service action plans to ensure they sufficiently take into account the impact of the recession
2.4 note the potential impact of the recession on its own services and budgets
2.5 note the role of the Local Strategic Partnership (LSP) in helping to alleviate the effects of the recession
3 FINANCIAL IMPLICATIONS
3.1 There are no significant direct implications of this report other than:
- the amounts referred to in the action plan attached as Appendix 1. These will be funded from within existing budgets.
- the risks for the Council's income budgets which were referred to when the annual budget was set and taken into account when evaluating the level of reserves required
- the continued significant loss of income resulting from lower interest rates which was taken account of in budget setting
- limited capacity to generate capital receipts
3.2 The Council budget agreed in February contained the following specific provisions in relation to the recession:
- £35,000 to support promotion of the local economy
- £150,000 to enable a delay in increases in car park charges and to enable a review so that any increases would be targeted to avoid an adverse effect on the economy, esp. local retailers
- £15,000 to enable youth outreach work
- £20,000 to support public events to promote the area
3.3 In addition, and after charging the above amounts, the Council is carrying a reserve of £671,000 to help protect it from the effects of the recession, not least reductions in fee income. The option remains to release some of this reserve for unfunded recession related initiatives on an exceptional basis later in the year.
3.4 A review of the medium term service and resource plan is already underway to assess what further actions the Council needs to take to maintain a balanced budget in future years, taking into account:
- Increasing demands on services especially for social care
- Expected tightening of government funding including general and specific grants to local authorities resulting from the impact of the recession on the public finances
- Increasing pensions costs as a result of demographic changes and lower long term investment returns, which are themselves as a result of the severe `correction' in financial markets during the early part of the recession
4 COMMUNITY STRATEGY OUTCOMES
4.1 The Community Strategy is presently being updated and this report, together with recent discussions and presentation of issues to the Local Strategic Partnership, will help inform the new strategy due to be reported to Council in September.
4.2 All of the Community Strategy outcomes will in some way be affected. The Local Area Agreement (LAA) which underpins the strategy will be particularly affected in areas associated with:
- delivery of new housing and new affordable housing
- crime and in particular property related crime
4.3 The latest position on the LAA was reported to Cabinet in March and referred to these issues and the commitment of the Government Office for the South West to reconsider the associated targets and reward grant.
5 CORPORATE PRIORITIES
5.1 The actions being taken in response to the recession impact on all corporate priorities. This was considered as part of the corporate plan refresh which was reported to Council in February this year
5.2 The recession and the recession action plan do not require a change in those priorities. However, there is an impact on the sequencing of actions, target setting and detailed responses.
5.3 With this in mind advice was issued to all managers as part of the annual service action planning process. That advice highlighted the following ideas:
- bringing forward some capital expenditure with a view to generating local employment and local confidence:
- Investment in the public realm
- Investment in new schools
A phased programme of investment in the public realm is being developed to complement the new Southgate development in Bath which itself is set to deliver up to 1500 jobs.
A bid has been submitted to government for investment of £80 million in local secondary schools as phase II of the Building Schools for the Future programme - a decision is due from Government later this year ready for spending in 2011/12.
In advance of this £8 m of capital grant has been brought forward to spend on improving primary and secondary schools.
- looking at options to lever in investment in affordable housing:
- engaging with the new Homes & Communities Agency to identify options
- working with local courts to help avoid repossessions
- working with landlords to help avoid evictions where these would result in homelessness and also to bring forward vacant properties for affordable housing
- ensuring the housing advice service is well resourced
Work already takes place to help avoid repossessions and advice has been posted on the Council's web site and in Council News for anyone facing difficulty. The Council works closely with its partners such as the Registered Social Landlords and the CAB. Follow the link: http://www.bathnes.gov.uk/BathNES/recessionadvice/default.htm
- linking the fuel poverty issue with the climate change priority to reduce carbon emissions
- initiatives such as `warm front' to encourage investment in insulation especially from and for the benefit of vulnerable groups
- public sector visiting officers playing a role in ensuring that there is good signposting of advice
Promotion of the warm front initiative is resulting in increased levels of enquiries and a greater level of support for investment in energy savings initiatives in existing homes
- developing actions to support `narrowing the gap':
- community engagement activities and anti poverty work including initiatives in revenue and benefits to promote benefit take up
Council staff in Revenues and Benefits as well as Council Connect have helped to publicise available benefits as well as running local advice surgeries and being on hand to support businesses with significant redundancies. Again the web, and Council News delivered to all households, has been used.
- promoting sustainable growth
- maintaining good awareness of strains in the local economy
- ensuring advice is on hand for employees that may be about to be made redundant
- promoting business opportunities across the district
- providing advice to small business about how to cope with the credit crunch and recession
The Council is working with partners through West at Work bringing together - Job Centre Plus, local colleges, & GWE Business West - to deliver advice to individual local businesses, to be able to respond when closures are threatened as well as generally promoting awareness through business breakfasts and the web, see www.business-matters.biz
A useful analysis by the Regional Development Agency appears through the link below. This sets the position for the district in the context of the impact on the south west as a whole. The claimant counts on p31 show large recent increases but still low levels compared with the rest of the South West.
5.4 These ideas have now been reflected in the revised corporate plan and are being picked up in service action plans.
5.5 There is more to do to develop the ideas in detail and a draft action plan is attached to this report. This, together with service action plans could form the basis for reviews by Overview and Scrutiny Panels. For more detail see Appendix 2.
6 THE REPORT
Context
6.1 The national analysis suggests that Bath in particular may be less affected but the district will be affected by very local variations:
- the success of individual employers
- housing market differences between Bath, Keynsham, Norton Radstock and rural areas
- differentials in incomes leading to the potential exposure of some residents in more deprived wards to fuel poverty
6.2 An analysis has been carried out by the LGA of the likely impact of the recession on different parts of the country. It concludes that based on previous experience, together with an analysis of the sectors of the economy:
- most at risk is London & the South East
- least at risk is the South West, and
- that there will be variable impacts at a sub regional level or below.
Their report can be found at:
http://www.lga.gov.uk/lga/publications/publication-display.do?id=1212613
6.3 There are a number of indicators that now show that the credit crunch or recession is biting locally:
- new housing development has come to a virtual halt in many places
- demand for job seekers allowance has been rising rapidly as has demand for benefits
- sales and lettings of surplus and commercial properties is becoming more difficult
- demand on agencies like the CAB for money advice is very high
6.4 There are some positive signs that the housing market may nationally and locally be starting to recover, but it is too early to be sure about this. The seasonal impact may explain the 30% increase in mortgage approvals which is up from the very depressed figures that applied at the end of the last calendar year.
6.5 A summary of local statistics is attached as Appendix 1. This provides a useful insight into the impact the recession is having now. In addition latest information on house prices can be found through the following hyperlink.
6.6 Taking into account the national findings about the likely impact of the recession, the relatively favourable local position may reverse in the medium term after the worst effects of the recession have abated.
6.7 The government will need to service and repay the debt that has arisen as a result the contraction of the national tax base, the measures to stimulate the economy and to rescue banks. This is likely to mean reduced levels of spend on public services in the medium term as highlighted in the Chancellor's Budget Statement, believed by many to be too optimistic about future growth and public expenditure cuts. Despite this, the budget shows:
- A new annual 4% efficiency target for the public sector starting in 2010/11
- Halving of capital expenditure funded from government over the next 3-5 years.
- Building schools for the future and Government revenue grant to Councils being protected in 2010/11
The high reliance of the economy in Bath on the public sector could become a disadvantage.
Actions
6.8 The proposed actions have already been set out in relation to the Council's priorities (see section 5). In addition the Council needs to consider:
- the impact on its own business
- its role as community leader and that of the Local Strategic partnership
6.9 In terms of its own business the Council has been, and needs to continue:
- keeping the Council's investment policies under review to ensure we continue to take a very prudent approach - a reliance on credit ratings is no longer sufficient
- reviewing the profile for future capital receipts to be generated from property sales with a view to investing in the public realm - sales at this time will not necessarily provide good value for money
- monitoring income budgets and responding accordingly - falls in land charges, planning fee, building control fee, possibly car parking, leisure and some other forms of income are likely
- assessing the heritage estate to ensure it is marketed effectively to customers that are still likely to want to access these facilities - this will include oversees visitors who will benefit from the lower value of the pound
- taking preventative actions to avoid a build up in demand for services such as homeless accommodation
- taking a proactive approach to debt management to avoid a build up of bad debts
- considering the impact of the credit crunch on Council finances, not least the pension fund, loss of income plus loss of asset sales capital receipts, and developing a medium term response
The Council has taken a very prudent view in its treasury management activities and has not had any exposure to Icelandic Banks but has, like everyone else, suffered declining returns on its investments.
Council budgets do not assume capital receipts in advance but there is sufficient capital receipts to fund the 1st phase of public realm works after Southgate is completed.
Heritage income and tourism are holding up well. The actions to prevent households moving into temporary accommodation have also been successful and avoided any increases.
6.10 In terms of its role as Community leader the Council has been, and needs to continue:
- working closely with advice agencies such as the CAB and helping to ensure they are adequately funded
- engaging with partner agencies on the LSP to ensure we have a joined up response - a special meeting of the LSP has been devoted to the issue and more work is planned
- ensuring that customer advisers in Council Connect are able to effectively signpost advice agencies to help deal with money advice, debt counselling and fuel poverty - advisers are well placed to make these links and need to know what actions all agencies are taking to help
The Council is a major funder of the CAB and has recently reviewed its funding agreement. The Council also works closely with and helps fund other parts of the voluntary sector.
A special meeting of the LSP has started to engage partners more fully in the issue. The next meeting is to consider further actions the partnership might take. Aspects of the partnership such as that with the Police, for community safety, is already focusing on property related crime.
7 RISK MANAGEMENT
7.1 The report author and Lead Cabinet member have fully reviewed the risk assessment related to the issue and recommendations, in compliance with the Council's decision making risk management guidance.
7.2 A risk assessment has been carried out and is reflected in:
- the Council's Corporate risk register
- annual assessment of financial reserves
7.3 Some of the key risks include:
- difficulty in achieving the Council's priorities as a result of additional pressures being placed on communities
- difficulty in achieving targets in the LAA such as for more affordable housing and more housing generally
- loss of revenue income from fees and charges with this type of income representing about 30% of the Council's total income
7.4 In response the Council has:
- reviewed its Corporate Plan
- developed action plans in respect of the recession as set out in this report and in service action plans
- indicated that it will need to renegotiate relevant targets in the LAA affected by the recession
- set aside a special reserve to help deal with the effects of the recession
- anticipated the impact of the next actuarial review of the pensions fund and started to set aside what will need to be increasing amounts in its budget and medium term financial plans
8 EQUALITIES
8.1 Individual services have been advised to consider the impact of the recession when carrying out equalities impact assessments.
9 RATIONALE
9.1 See section 1.
10 OTHER OPTIONS CONSIDERED
10.1 All of the actions in this report are optional except those already in place to ensure there is a prudent approach inherent in the Council's budgets.
11 CONSULTATION
11.1 Cabinet members; Other B&NES Services; LSP Stakeholders/Partners; Section 151 Finance Officer; Chief Executive; Monitoring Officer
12 ISSUES TO CONSIDER IN REACHING THE DECISION
12.1 Social Inclusion; Customer Focus; Sustainability; Human Resources; Property; Young People; Human Rights; Corporate; Health & Safety; Impact on Staff; Other Legal Considerations
13 ADVICE SOUGHT
13.1 The Council's Monitoring Officer (Council Solicitor) and Section 151 Officer (Strategic Director - Support Services) have had the opportunity to input to this report and have cleared it for publication.
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Contact person |
Andrew Pate, Director of Resources and Support Services |
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Sponsoring Cabinet Member |
Councillor Francine Haeberling,
Leader of the Council |
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Background papers |
Budget report February 2009 |
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Please contact the report author if you need to access this report in an alternative format |
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