I asked Lynne to forward her letter to the local newspaper as it gives a succinct, clear picture of RBWM’s current financial position.
I read with interest the letters, from ex-councillors David Hilton and Andrew Johnson, regarding the Royal Borough’s finances.
Rather than rhetoric I would just like to reply with the facts.
An S114 statement is when a council cannot produce a balanced budget for the following year. The issuing of a ‘risk of S114’ statement is a responsibility of the most senior officers, the CEO and the Director of Resources. Without urgent action, to address the unbudgeted costs, the council is at risk of falling below its minimum reserves this year and not being able to produce a balanced budget next year.
As stated, last week, by Andrew Johnson (Ex- Leader of the Council) ‘The clear plan was to use receipts from the development of the golf course to pay off a big chunk of that borrowing’.
We know from the minutes of council in February 2019 that the Conservatives ‘plan’ was to achieve those receipts within the ‘Medium Term’, by 2024.
The plan failed, it failed dismally, as it was not delivered in the planned timescale and has resulted in the council carrying a capital debt of £203m, a pension deficit of £95.7m and estimated capital receipts of only £20m by March 2025, not enough to even cover capital costs ‘in-year’ let alone pay down the debt.
Borrowing costs on that debt is forecast to hit £14m next year, that is £14m less we can spend on services to our residents.
The Royal Borough’s spending power per household, at £1500, is well below the local authority average of £1885. This is due to the historic low levels of council tax. With 63,000 households, that is £24m a year less than an average council would be able to spend on services. This is significant, as our total service budget is less than £100m
The outgoing Conservative administration had maximum council tax increases built into the budget for the next 3 years and, they told us, lobbied central government for the flexibility to increase council tax further. It appears they realised the council would need as much income as possible to balance future budgets due to the failure of their ‘plan’.
In September Cabinet received an urgent update, from senior council officers. Based on the numbers at the end of June (less than 2 months after the current administration took control) it was forecast that we would significantly overspend (£7m) by the end of the year. They stated that it was due to historical policies of low council tax, borrowing costs, low reserves, unviable savings, unbudgeted demand and an over reliance on income forecasts that have been proven to be inflated.
The risk is very real. We must increase income and reduce costs but I have confidence that officers, Cabinet and all members will be doing their utmost to ensure that the risk of issuing a S114 statement reduces over the next 6 months.
Cllr Lynne Jones (Ind)
Lead member for Finance