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Council takes action to tackle serious budget pressures

27 August 2022

7 November 2022: Council forced to consider radical savings plan to close £37.6m budget gap

Plymouth City Council’s Cabinet is considering an urgent package of measures to address an unprecedented £37.6 million budget gap caused by issues that are impacting local authorities across the country.

The Council has already been grappling with a £15.5 million shortfall in this year’s budget caused by factors such as inflation, huge increases in gas and electricity bills and rising demand for critical social care services. 

report to Cabinet on 10 November says the same national factors are leading to a projected £37.6 million shortfall in its budget 2023/24. 

The report sets out a range of proposals that would reduce costs by £26.2 million to help enable the Council to fulfil its statutory duty to set a balanced budget. 

If all the potential savings are approved, the Council will still be left with a £11.4 million shortfall to be closed before a balanced budget can be set in February. 

At the same time it needs to find another £6 million of savings in order to close this year’s gap. 

Council Leader Richard Bingley said: “All councils, including ours here in Plymouth, have been hit by historic, unprecedented levels of soaring fuel, wage and other inflationary costs.  

“This has had an overwhelming impact upon the costs of our vehicle fleets, building operational costs, street lighting and staffing. Put simply, experienced council leaders and chief executives across the region are all telling me that, very sadly, they have seen nothing like this scale of financial challenge before.  

“Quite rightly, we also have a legal duty to balance our city’s annual budget. Failure to seriously grip our public finances, will leave our city open to intervention from central government commissioners, and this is not an option, nor a risk, that this administration is willing to take. 

“We are leaving no stone unturned to identify ways of reducing costs and are determined to protect local services as best we can, particularly those that support the most vulnerable in our community. 

“We are doing this in an urgent but considered way and our recovery plan is focusing on modernising, generating income, increasing efficiency and making difficult decisions to change, pause or stop things. 

“Reducing local services is the very last thing any of us came into public service to do but we simply can’t duck our responsibility to make unpalatable decisions. The consequences of not being able to set a balanced budget would be catastrophic for our city. 

“Wherever possible we are trying to squeeze out even more efficiency in what we do. With the cost of living crisis we know families in Plymouth are dealing with rising bills in the same way we are and the last thing we want to do is add to that burden, so we don’t propose increasing our fees and charges lightly. However, some of our costs rising by up to 20 per cent we have no choice but to increase fees and charges to cover increases in our bills. 

“This is an important issue for the city as a whole and we will be seeking the views and ideas of all elected members – regardless of political party – as well as those of Plymouth residents. We will be asking residents to give their views on our saving proposals so far, as well as their ideas for what else we can do to protect local services, through an online form our website.” 

The proposals being considered by Cabinet affect all areas of the Council. 

They include:  

  • Introducing charges for collecting garden waste – Plymouth is one of the few authorities remaining not to already charge for this non-statutory service 
  • Increasing fees and charges by 10 per cent this year and next year
  • Increasing parking fees in line with proposals recently consulted on
  • Reducing costs in children’s social care, including working with families to keep more children at home, reducing the use of residential care and reviewing organisational structures
  • Managing and reducing demand on adult social care
  • Reviewing early help provision and children’s centres, alongside partners
  • Reducing subsidies for bus services that cannot be run commercially 
  • Reviewing senior management 
  • Vacating buildings earlier than planned

Residents will be able to give their views on the budget proposals through an online form that will be available on the Council’s website from Friday 11 November. The feedback will be considered by all elected members before final budget decisions are made.

The Cabinet will discuss progress in reducing the budget gap for this year and next at its meeting in December. The final budget for next year is due to be set by the full council in February. 

7 September: Council needs to make tough decisions to tackle projected overspend

Further tough decisions will be needed over the coming weeks as the City Council continues to address extraordinary budget pressures caused by rapidly rising energy costs and other national and international factors.

Cabinet member for Finance Mark Shayer says the Council’s recovery plan will leave no stone unturned to identify ways of reducing costs to deal with the unprecedented budget pressures it is facing for this stage in the financial year.

Councillor Shayer said: “Last month we identified a potential overspend of £13.6 million, caused in large part by national issues beyond our control which are impacting all councils across the country. Since then we have been working hard to identify savings but at the same time have also identified further unavoidable increases in our costs.

“Our additional costs this year now amount to £14.8 million but the work we have done so far means we are in a position to reduce the projected overspend to £8.7 million – a saving of £6.1 million already. This is good progress but it remains a very serious position to be in at this stage in the financial year, especially when we know we will have a very significant shortfall in the resources we need to set a balanced budget for next year.

“We have now launched a recovery plan that includes thorough reviews of all fees and charges, our procurements and contracts, our capital programme costs, management of debts, reserves, grants and subsidies, our buildings and estates and our current transformation initiatives.

“This is urgent and we have to take decisive action. We will leave no stone unturned or opportunity missed to identify ways of reducing costs as overspending is simply not an option. As a political leadership team we are treating this like we would a serious emergency and will be taking positive action to address it.

“While we want to protect services as much as we can, with a budget shortfall this large we simply can’t expect to be able to carry on doing everything we currently do to the same level. Until we get a clear indication of the amount of government financial support, if any, we may have to pause or withdraw some discretionary services. Statutory services of course remain protected.”

A report to Cabinet on 8 September says authorities across the country are facing similar issues due to rising costs. Plymouth’s cost pressures include £7 million of non-controllable costs, including a £4.3 million rise in energy costs. The Council is forecasting that gas bills for its buildings estate, including the crematoria, will increase from £334,000 to £984,000, while electricity bills will increase from £1.3 million to £2.7 million.

The energy costs of lighting Plymouth’s streets will rise by £1.1 million and fuel bills for the Council’s fleet of more than 200 essential vehicles such as refuse lorries have risen by more than £64,000. The ongoing impact of the pandemic is also being seen in other rising costs and demand pressures. Changes to people’s working habits have led to an increase in the amount of domestic waste that needs to collected, adding to our annual collection costs. Demand for social care and emergency accommodation has also increased, while income from parking and libraries has decreased.

Councillor Shayer added: “This is not a position that any Council administration wants to be in but this emergency has happened on our watch and we will deal with it.

“We are very conscious that families in Plymouth are experiencing the same issues at home that we are as a council, with bills rising to a level no one could have anticipated. We will always listen to the views of all councillors and especially Plymouth residents as we go through this process.”

11 August: Garden waste collections to end early as Council tackles severe budget pressures

Garden waste collections are to end early this year as part of urgent measures to help address a projected £13.6 million overspend in the City Council’s budget.

The collections, which have been temporarily suspended for one month due to staff shortages, will end for the 2022 season following one final collection round starting on Monday (15 August).

Councillor Mark Shayer, Deputy Leader and Cabinet member for Finance and Economy, said: “We know this will be disappointing news for many residents and we haven’t taken this decision lightly but we absolutely have to take urgent action to reduce the unprecedented overspend that we are projecting this year.

“We are facing a very serious financial position which is largely due to national issues beyond our control and we have to act now if we are to be in with a chance of balancing the books at the end of the financial year. We anticipate that stopping collections now instead of in November as originally planned will save around £200,000.

“We will be carrying out one more collection over the next fortnight to make sure that everyone can get rid of the garden waste they have been building up over the last month.

“We’re sorry for the inconvenience this may cause but we hope that people understand that the rising costs we are experiencing now are beyond our control.

“This decision is for this year’s collections only. We have not made any decisions about garden waste collections next year.”

The decision was made as the Council’s Cabinet considered a revenue monitoring report highlighting the projected £13.6 million overspend in this year’s budget due to rapidly rising energy, fuel and materials cost, as well as  increasing demand and costs for social care services.

The escalating energy costs include an additional £1m bill just for street lighting across the city. The Council is also seeing a 31 per cent increase in fuel costs for its vehicle fleet, which includes refuse and recycling collection vehicles.

The ongoing impact of the pandemic is also being seen in other rising costs and demand pressures. Changes to people’s working habits have led to an increase in the amount of domestic waste that needs to collected, adding £980,000 to annual collection costs.

There is also an ongoing rise in the number of people requiring adult social care services. There has also been an increase this year in the number of people requiring emergency bed and breakfast accommodation.

Councillor Shayer said: “We really do not relish making any decisions that reduce services for Plymouth residents but it would be irresponsible not to act quickly and let the problem get even worse. We have limited scope for what we can do as some our key services – such as social care – are statutory but we are having to explore all options for reducing costs.

“Garden waste collections are discretionary and Plymouth remains one of the few remaining councils that offer the service without charging an annual fee.”

A report on other options for reducing the projected overspend is due to be considered at a further Cabinet meeting in the coming weeks.

When garden waste collections end residents will be able to take their garden waste to the Council’s household recycling centres, or compost it at home where possible.

Anyone making a trip to the recycling centres is encouraged to offer to also take garden waste for friends, family or neighbours who don’t have access to a vehicle.

5 August: Council takes action to address budget pressures caused by national issues

Rapidly rising energy and material costs and increasing demand and costs for social care services are among the causes of a £13.6 million projected overspend by the City Council for this year.

finance monitoring report to be considered by the Council’s Cabinet on 11 August says the scale of the projected shortfall is unprecedented for this stage of the financial year and urgent action is already under way to manage the problem.

Councillor Mark Shayer, Deputy Leader and Cabinet member for Finance and Economy, said: “Many households are now beginning to feel the pinch as the cost of living increases and the Council is facing the same issues. We are now being seriously impacted by rapidly rising costs resulting from the national and global economic situation and the legacy of the pandemic.

“As a result, we are projecting a very sizeable shortfall in this year’s budget which we need to address urgently as we also embark on the considerable challenge of balancing the books for next year’s budget.”

The report says the Council is seeing a huge increase in its energy costs this year, including an additional £1m just for street lighting across the city. It is also seeing a 31 per cent increase in fuel costs for its vehicle fleet, which includes refuse and recycling collection vehicles.

The ongoing impact of the pandemic is also being seen in other rising costs and demand pressures. Changes to people’s working habits have led to an increase in the amount of domestic waste that needs to collected, adding £980,000 to annual collection costs.

There is an ongoing rise in the number of people requiring adult social care services. There has also been an increase this year in the number of people requiring emergency bed and breakfast accommodation from 18 to 180 due in part to rising costs in the private rented sector.

The Council’s Children, Young People and Families department is currently facing projected overspend of £3 million as the cost of specialist residential placements for vulnerable children rises nationally and costs in care and transport for services for young people rise.

Income that is used to support Council services is also decreasing in a number of areas, including parking and libraries and the Council will see an increase in staff costs following national pay agreements.

Council services are already working on potential measures to mitigate the projected overspend and a range of cost reductions totalling more than £8 million are now being worked on. These proposals are being further developed as work continues to identify ways of closing the remaining in-year gap.

At the same time, the Council is also working on how it will deliver a balanced budget for 2023/24 in light of these additional pressures.

Councillor Shayer said: “The scale of the projected in-year overspend is unprecedented at this stage in the year and our position is serious. We are already pulling out all the stops to find ways to reduce spending but we still have a lot of very difficult work ahead to close the remaining gap for this year.

“This will mean some very difficult choices will need to be made and it is clear that the Council won’t be able to continue to do everything it has in the past. There are no easy options and no quick fixes. We aim to work as one Council on this challenge and to listen to our staff and residents as we strive to continue delivering the best services for the people of Plymouth that we can.”