KCC Budget and the Financial Challenge. John Simmonds Cabinet Member for Finance & Procurement Dave Shipton - Head of Financial Strategy

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1 KCC Budget and the Financial Challenge John Simmonds Cabinet Member for Finance & Procurement Dave Shipton - Head of Financial Strategy

2 Introduction The Council is in the middle of an unprecedented period of year on year spending reductions affecting capital and revenue budgets Over the past four years we will have delivered a total of 350m savings on a net revenue budget of just over 1,000m spent on day to day services Over the same period capital spending has reduced from a peak of around 500m per annum to around 200m per annum In spite of these significant reductions we sought to preserve front-line services and to support Kent businesses In this presentation we will set out more about the journey to date, our expectations for the future, impact on Council Tax/business rates and how we plan to meet the financial challenge

3 Council Functions in Two Tier Areas County Social Services: Children Adults Elderly Children s & Young People Schools Roads Bus subsidies Mandatory (older people, schools) Discretionary Libraries Waste Disposal District Building Regulation Housing Leisure Services Licences Parking Planning Public toilets Waste Collection Council Tax Collection Business Rate Collection

4 Kent in a nutshell Kent s land area is approx 1,400 sq miles There are 630,000 households in Kent 1.5 million people live in Kent 71% of people live in urban areas but they only occupy 22% of the total land area.

5 KCC s Facts and Figures KCC is the largest County Council in England Revenue spend 1.8bn (Lancs 1.7bn, Essex 1.6bn) Capital investment 0.7bn over 3 years We employ 32,600 employees (many are part-time/sessional = 21,400 FTE) of which 22,000 managed by schools nearly half non schools work in social care more than half earn less than 19k

6 Budget Deficit

7 Budget Deficit

8 National Debt

9 Government Policy Eliminate budget deficit over 5 year rolling programme Reduce Public expenditure as % of national economy 80/20 Rule Protected Departments Substantial reductions in other departmental spend Reductions in annually managed expenditure Revenue vs Capital

10 And now a bit more about how Kent County Council gets its money and what the council does with it

11 How the Council is funded Specific Government Grants - 909m DSG, Public Health, Asylum General Government Grants - 361m RSG, business rates top-up, ESG, NHB Council Tax - 533m Business Rates - 46m Income from fees & contributions - 308m

12 Relative Funding (excluding schools) Income 18% Specific Grants 17% Business Rates 3% General Grants 25% Council Tax 37%

13 KCC Annual Budget Gross m Income m Grants m Net m Adult Social Care Childrens Social Care Other Children's Services Waste Disposal and Recycling Highway Management & Maintenance Home to School Transport Other Public Transport Libraries, Registration and Archives Support for schools Public Health Other frontline services Support Services Corporate & Democratic Debt financing Other financing Sub Total (excl schools) 1, Schools Total 2,

14 Or put another way In-house spend in public sector Goods and services procured from private sector Services from voluntary sector

15 Some of the services we provide for Children Education for 130,00 pupils in 460 maintained schools Home to school transport for 14,000 children in mainstream schools and 4,000 children with SEN 1,600 Looked After Children including adoption, fostering and residential care 97 children s centres Preventative work with more than 8,000 families avoiding the need for care Support for 1,700 severely disabled children Support for 900 apprentices through Kent Employment Programme

16 Some of the services we provide for Adults In total 32,500 adults receive support at any one time Care for 5,000 older people in their own home Care for over 600 adults with Learning Disabilities through Supported Independence Service Care for 6,300 adults in residential homes Direct payments to over 3,000 elderly and vulnerable adults to make their own care arrangements Respite, enablement and day care Support for 4,000 adults and older people on the edge of care

17 Some of the services we provide for the whole community 26million free journeys on public bus services for the elderly and children Maintaining and managing 5,000 miles of roads and 4,000 miles of pavements Disposing of and recycling 700,000 tonnes of domestic waste 100 libraries attracting 6.3m visitors Helping the Kent economy by creating 2,500 new jobs through business loans and promoting Kent 1.4m enquiries through the Contact Centre

18 Council Tax

19 The amount of council tax you pay depends on the valuation band of your property A B C D E F G H

20 Council Tax Most common property in Kent is Band C (174k households out of 629k) In 2014/15 Band C owners paid towards KCC services ( per week) average Band C in 2014/15 was 1, although depends where you live ( per week) The amount of council tax you pay depends on the valuation band of your property

21 What else do I pay for in my Council Tax Parish, 30 Police, 128 Fire, 62 District, 165 Total 1,335 KCC, 950

22 so, what will you pay next year? Consultation launched on 9/10 proposes increase KCC element up to referendum level (1.99%) = for Band C up to Note this is consultation not decision BUT Cannot speak for other authorities Will change if referendum thresholds are reduced Needs to be agreed by County Council in February

23 Business Rates

24 Business Rates Largely national tax collected locally Quinquennial valuation National multiplier Mandatory discounts and exemptions - empty properties (nil), small businesses, charitable relief transitional relief Some local discretion charities, exceptional hardship, key rural services Upper tier power to levy supplemental 2p on businesses over 50k/ 100k could raise xm

25 Business Rates in Kent Approx. 47.5k non domestic properties in Kent Rateable Value 1.36bn Net Yield 521m District Properties RV Yield Dartford 2, m 83m Maidstone 4, m 55m Ashford 4, m 45m Shepway 3,674 74m 26m Gravesham 2,271 59m 22m

26 Where do business rates go 50% returned to HM treasury for redistribution through grants system Roughly equals 259m A further 44m returned through tariffs and top-ups 239m returned via grants Net loss to Kent = 64m 50% levy on district share of growth

27 And now looking to the future, first the context for funding and spending

28 Spending and income projections (excl. Schools)

29 And it would be worse if we don t increase Council Tax

30 And it s not just us who have reached this conclusion... The LGA issued a stark warning: the rising cost of social care and waste means that money available for all other services will fall by 66%.

31 We are facing the unprecedented prospect of having to make significant year on year savings for a sustained period of at least five years

32 And now what are our proposals to meet this challenge...

33 The equation 2015/16 3 years Grant Reductions m -15.4% - 118m -32.6% Council Tax/Business Rates m 1.99% + 42m 7.2% Spending Demands 48.9m 5.2% 130m 13.8% Savings 93.2m 9.9% - 206m 21.9% Savings if we do not increase Council Tax 103.8m 239m

34 Additional Spending Demands 36.2m of additional base budget spending for 2015/16: Staff Pay & Performance 4m Prices 9.7m (energy, highways, social care, transport, waste disposal) Demography 8.5m (adults LD 7m, children s 1m) Legislative 3.9m (Deprivation of Liberty Safeguards 1.3m, Care Act 1.0m, Landfill Tax 0.3m etc.) Base Budget Pressures 4m (children s and SEN transport) Capital Financing 5.6m (schemes already in progress and new schemes) Similar magnitude of pressures in 2016/17 and 2017/18 (circa 36m) 12.7m of one-offs used to balance 2014/15 budget can t be repeated, 9m of further one-offs for 2015/16 which also cannot be repeated in subsequent years 34

35 Summary of savings for 2015/16 Transformation 31m Adult Social Care 14.5m Children s services 8.3m Waste recycling 2m Libraries 1.5m SEN Transport 1m Support services 3m Other Savings 45.8m Income 5.9m Staffing 8.1m Buildings 3m Contracts 13.2m Community Wardens 1.3m Financing 11m Reserves 9m Gap 7.4m

36 Closing the gap Busting Council Tax referendum threshold very unlikely Further use of reserves also unlikely we have never before planned to use reserves this early in the process Other sources of income e.g. Council Tax discounts, raising income, etc. Reducing pressures prices, pay, etc. Further savings almost inevitably will require political choices

37 What will the council do with the consultation responses and will it make any difference

38 Next Steps Consultation closes 28 th November We will evaluate what people have said and present this to elected members in December Final draft budget proposals published 12 th January Proposals will be scrutinised by council committees in January Final report to Cabinet 28 th January County Council 12 th February Throughout this process we will look to take account of what people have said or explain why not