COUNCIL WARNED OF LOW RESERVES

Speech by Cllr. David Green - Shadow Cabinet Member for Finance & Corporate Services in response to the Conservative administrations proposed budget.

"My impression is that (Conservative Cabinet Member) Cllr Wise is betting very heavily on Labour winning the forthcoming general election.

I say this, because the assumptions in the Medium Term Financial Plan are that Thanet’s Formula Grant will be cut by 3% in each year from 2011/12 to 2014/15 and Council Tax rises of 2.5% each year over this period.

Also implied is that all the other generous Labour Government Grants this Council receives, such as Community Cohesion and Working Neighbourhood funding and the £8m of ring fenced grants will all continue.

Unlikely though a Conservative government is, I would have thought that this current administration would have at least conceded the possibility, however remote.

It is clear that the prudent approach to cutting public debt, that underlines the assumptions in our financial plan are not what any potential Conservative Government have in mind.

They have indicated drastic cuts to local government funding, and that these cuts would take effect immediately on them taking office. They also propose a freeze on Council Tax increases for at least three years.

The reason these assumptions in the Financial Plan are so important, and why they, at these difficult times could almost be considered reckless is because, as I warned last year, the Council’s reserves are dangerously low.

The Director of Finance and Corporate Services in her report (page 63) says that it is considered appropriate that the optimum level of general reserves should be 10% of the net revenue budget.

I quote from the report:

“This balance is expected to drop to £1.883M by March 2011. This is JUST 8.16%.”

Last year we were promised action to restore the level of reserves. This has not occurred, and the situation is compounded by the intention to take £1.8m from various earmarked reserves, reducing them from £4.8m to £3.1m.

This is an enormously risky position for the Council to take, especially when entering what are considered to be very difficult economic times.

Chair, Could I give notice of my intention to propose an amendment on this subject after my speech?

Reserves also provide the essential buffer to aid cash flow. We are already seeing signs of cash flow problems, with officers being told not to spend agreed budgets and various grant schemes remaining unspent from year to year.

Each year this administration promises a number of savings in order to balance the budget. Each year, we on this side (Labour) express skepticism, and each year we are proved correct.

This year, only £261k of £741k promised are still considered achievable, and we are offered savings through a new contract with staff, cutting overtime, agency and consultants and cutting staff perks, all measures that we have advocated over many years and have been ignored. As the editor of the Gazette said last week, “why weren’t these things dealt with years ago?”

In conclusion the Council’s budget is still dangerously over-committed.

The failure to deal with the depletion of reserves is irresponsible, considering the predicted economic situation. There is still no sign of this administration gaining control over employee costs. We have a situation where two thirds of the District is starved of funding and where the remaining third shows little benefit for all the money thrown at it.

As the Sun newspaper said recently:

“MARGATE was once Britain’s holiday resort of choice, with crowds packing the beaches for more than two centuries. But today, it is strewn with dilapidated attractions and boarded up shops - presenting a sorry picture postcard view of this ravaged east Kent town. A survey has named Margate the ghost town of Britain with more than a quarter - 27.2 per cent - of its shops shut.
Now, the once majestic seafront is a patchwork of vacant shops and arcades set among the remaining pubs and slot-machine joints.

This after 7 years of this (Conservative) administration!

Proposed amendment: That Council instructs officers to commission and publish an urgent independent review of the exact extent of its financial reserves, the adequacy of the reserves to deal with events in the light of any anticipated economic developments, and to provide the necessary buffer to achieve an efficient cash flow.

The Conservative group voted down the amendment.

Cllr. David Green - Phone: 01843 591495

Published by Thanet Labour Group Press Office - 44 Northdown Road, Margate, CT9 2RW.