County council demands money with menaces

Our Surrey county councillor has circulated an email to residents in his wards (see extract below) recently, presenting the pros and cons and attempting to explain why Surrey County Council [SCC] is proposing a county-wide referendum for a 15% increase in the county precept to be levied on residents via their Council Tax bills. His explanation illustrates the conundrum faced by councils that have followed the Government mantra of ‘austerity’ to face yet more severe cuts demanded at the local level whilst Whitehall gets off relatively lightly, if not scot-free. However, the message is couched as a threat, “pay up or we’ll slash familiar services and you won’t like that will you” and that does not chime well with residents that are aware the council leader awarded himself a 60% pay rise in 2014 and where Surrey County Councillors were paid nearly £2million and its leader was paid the third highest rate in the south east of England in 2015. Read on and judge for yourselves.

“Over the past six years SCC has done what the Government has asked, and has reduced its costs by £70 million a year, for each of the past six years, so accumulated savings in costs of over £450 million per year (N.B. on a budget of some £2,000 million). In essence the amount of money that the Council spends today is the same, in cash terms, that it spent six years ago.”

“Each year the Government publishes a draft of what money it is prepared to give each Local Council, and has been in the process of reducing the Government grant to SCC from £151 million a year to zero. We are still awaiting the final settlement for the year to come and, if there is no change of heart on the part of the government, SCC will have a shortfall in the coming year of some £93 million.”

“There are only four sources of income to the Council:

  • Government Grants and
  • Business Rates (both of which SCC has no control over);
  • a small amount of money raised through fees and charges;
  • Council Tax, the main source of income, where the amount that can be increased is limited by the Government.

That limit has been set at 5% of this year, but an increase of 5% would only raise about a third of the shortfall. The only way that a Council can consider a Council Tax increase beyond the minimum is to hold a Referendum.”

“So SCC will now consider holding a County Wide Referendum on the future of Public Services in Surrey, asking voters if they will give approval to a Council Tax increase of 15%. The alternative will be an increase of 5% (the maximum allowed without a referendum).”

“If the 15% increase is approved by voters by a “Yes” vote, that will raise sufficient income £93 million a year) to maintain existing public services, including the extra costs being driven by demand for Adult Social Care services and Children’s services.”

“If the vote is “No” then a 5% increase will be the result. However, that will still leave SCC with a £60 million shortfall in this year.”

“By law, a Council is not allowed to set a deficit budget. It must legally set a budget for its expenditure and how much income it will get. It is not allowed by law (unlike the Government) to borrow the difference.”

“So if there is “only” a 5% increase, that will have to be accompanied by severe reductions across all council services and, although the details have not yet been announced, what should be expected will include:

  • Closure of some fire stations
  • Closure of MOST of the libraries, probably leaving just one in each main town
  • Closure of probably half the recycling centres
  • Elimination of the remaining subsidies of uneconomic rural bus routes
  • Severe reductions in road and pavement improvement plans, and less road safety schemes

The Council will have to concentrate the available funds on the statutory services of Adult and Children’s social services.”

“So the expression “between a rock and a hard place” comes to mind. If there is a referendum (assuming the Government does not give extra funds, and enough to avert the above) the county council will all have a hard choice to make. In essence, whether residents personally are prepared to pay an extra 10% increase in Council Tax (the difference between 15% and the 5%) to keep services more or less as they are or that residents are not prepared to pay the extra and accept the consequences to public services, in the knowledge that SCC will simply not have the money available to continue. That option will be a 5% increase in Council Tax and cuts to services.”

“There will be more information over the coming weeks. It is hoped that the Government will finally see that it cannot pile on more and more legal responsibilities onto Councils (about 60 extra legal duties in the last few years) but without the ongoing finance to support those responsibilities.”