Conservative council budget - Lib Dem comment and proposals

Isle of Wight Council Budget 2009-10

The Conservative-run Isle of Wight Council was the only upper-tier local authority in England last year (out of 150) to receive a reduced score from the Audit Commission for "Financial Standing". This raises serious concerns about the quality of financial planning and control being exercised by the ruling group.

An outgoing administration has a particular obligation to present a robust and deliverable budget, which is at the same time fair to local taxpayers and service users alike. The current Cabinet proposals have none of these qualities, and the Liberal Democrat proposal is therefore that the budget be referred back to them for reconsideration, against certain key criteria, for resubmission to Full Council on or before the legal deadline for Council Tax setting on 11th March.

Proposed amendment by the Liberal Democrat Group:

That the Cabinet be instructed to reconsider its budget recommendations, and to bring new proposals to a special meeting of Council on or before 11th March 2009. The new proposals are to be designed to satisfactorily address the following issues:

1. With the Retail Price Index now at 0.1%, Bank of England forecasts of a fall in the CPI to 0.5% this year, and a generous Formula Grant increase of 4.2%, Island taxpayers should not be expected to bear a 3.5% increase in Council Tax in the current difficult economic climate.

2. The savings are particularly targeted at vulnerable minority groups. More tangible evidence is needed about how these will be "painlessly" achieved than mere expressions of confidence from the Cabinet member.

3. Many of the proposed efficiency savings are attributed to vague generic improvements such as property rationalisation and computerisation. Given experience elsewhere, and even more significantly the current administration's lack of progress so far in these areas, more robust plans need to be in place to avoid a £15m+ shortfall by 2011-12.

4. Vague generic savings relating to property are expected to occur despite a maintenance backlog of £25m that is not addressed.

5. A massive overspend in the current year has been met by undocumented use of one-off grants and service rationing and slippage, the sustainability of which needs to be demonstrated.

6. Surprisingly, given amounts spent on talking about the environment, there are yet again no obvious energy efficiency investments or savings mentioned in the budget.

7. Severance costs this year so far amount to £1.7m, following an average £1.3m over each of the last three years. The budget appears to assume that this suddenly drops to zero, which seems unduly optimistic.

8. Capital slippage has been £23m in 2007-08 and £37m in 2008-09. The budget needs to demonstrate how, given this record, the programme set out in appendix 3 can realistically be delivered, particularly in relation to highways where Government funded allocations have been under-utilised by 66% in 2007 08 and 83% in 2008-09.

9. Despite four years of "preparation" the massive capital cost of school reorganisation, and its funding source, is currently missing from the proposals entirely.

10. Provision for the Highways PFI funding gap (£11m) has surprisingly not been updated despite a two year delay in implementation, during which time capital investment in road maintenance has dropped to insignificant levels, increasing the eventual reinstatement cost exponentially.

11. There is no provision for upgrading an alternative route when the Undercliff Drive closes.

12. The current £161 million deficit on the Pension Fund is not addressed.

13. Appendix 11 shows the General Fund at March 2011 at £5.8m, but also uses the same £5.8m to fund estimated risks. Free reserves are therefore forecast to be zero at this point, which is unacceptable given the uncertainties highlighted above.

14. The general lack of budget transparency and low levels of consultation responses should be remedied by publishing the Medium Term Financial Strategy in draft form before the budget meeting in future, rather than some weeks or months later.