Message from Councillor Mark Lowry
Cabinet Member for Finance
In Plymouth we are not alone in experiencing huge pressures on our finances due to rising costs and exceptional demand and cost pressures in social care services.
And like everyone’s household bills, our costs have continued to rise steeply at the same time as more people need vital social care and housing support.
Our financial position remains serious, but we are determined to bring as much stability to the Council’s finances as we can and carry on delivering valued local services and investing in Plymouth’s future.
We have drafted a new medium-term financial strategy to guide the Council’s budget management over the next 5 years.
It sets out our projected costs and the level of resources we will have. This clearly shows that we will need to continue to take firm action to reduce costs and generate income to protect against the significant challenges ahead.
The new Government is committed to addressing some of the long-term issues that have impacted local government in recent years and there have been some encouraging announcements about future funding for critical areas. However, there are no easy or quick solutions to the challenges facing all councils. While we can’t avoid having to make difficult decisions to balance the books, we can promise that we will be relentless in seeking to provide the best possible value we can for Plymouth residents and making every pound count.
We have set out some of the challenges we face, as well as some examples of what we are doing to address them.
You can help by giving your views about what’s most important to you and letting us have your ideas for helping us balance the books. Please take a few minutes to complete the survey and have your say.
Have your say
We want to hear the views and ideas of Plymouth residents before we set the Council’s budget for next year.
Your views will help us set a budget that rises to this financial challenge and delivers best value, high quality services that improve the lives of residents.
We have some information about some of the financial challenges we are facing, where we receive funding from and the current priorities for Plymouth, followed by a few questions.
Give your views by Wednesday 18 December.
Our priorities
Our priorities for Plymouth include:
- tackling crime and antisocial behaviour
- cleaner greener streets and transport
- more homes for social rent and affordable ownership
- attracting investment, jobs, skills and better education
- keeping children, adults and communities safe
- working with the NHS to provide better access to health, care and dentistry
We are also prioritising:
- making Plymouth a great place to grow up and grow old
- minimising the impact of the rising cost of living on Plymouth residents
What we do
Your Council plays a big part in daily life in Plymouth. We spend more than £200 million a year on providing more than 300 services that are used by Plymouth residents every day.
These include collecting your waste, maintaining roads, looking after parks and green spaces, protecting the environment, making Plymouth a safer city, providing libraries, ensuring children and young have the best start in life and providing social care for older and more vulnerable residents.
We also grow Plymouth’s economy, secure investment in Plymouth and support the creation of new jobs and homes.
Key facts and figures - Text version
- 265,000 people live in Plymouth
- 272,000 people visited The Box last year
- There are 514 looked after children
- 3,700 adults receive social care services
- 73,800 tonnes of refuse and recycling are collected from Plymouth homes every year
- We maintain 31,670 street lights
- We look after 873km of roads and 903km of footways and cycle paths
- 444,239 books and eBooks are loaned in our libraries
- 17,000 trees have been planted in the last three years
- We attracted £100m in grants for economic development in 24 months
- 3 million people visited our website last year
Understanding our budget
We have two very separate budgets that enable us to deliver hundreds of services for the city: one for ‘revenue’ and one for ‘capital’.
Revenue funding pays for the hundreds of services we provide every day – as well as our running costs like salaries and wages, fuel, utility bills and contracts with those who provide goods and services for us.
The money for our revenue budget comes from Council Tax, charging users for some services, Government grants and a proportion of local Business Rates.
Capital funding is the money we invest in the Plymouth’s infrastructure, including improvements and repairs to buildings, schemes to improve the city’s transport network, improvements to schools, delivering new assets such as The Box and investing in the things that create and sustain jobs, support affordable housing and help tackle climate change.
The money for capital expenditure comes from income sources such as capital receipts (from selling land or buildings), borrowing, contributions from developers to contribute to local infrastructure when we agree planning permissions (section 106 agreements) and specific grants.
The services delivered by the Council are broadly split into two types:
1. Those that we are required to provide by law (statutory services)
These include:
- providing education services
- children’s safeguarding and social care
- adult social care
- waste collection
- planning and housing services
- road maintenance
- providing a library service
2. Those that we provide for the benefit of city residents but are not required to by law (discretionary services).
These include most other services such as cutting grass, maintaining parks, providing leisure facilities and events and collecting garden waste.
Budget for 2025/26
More than 70% of the total revenue budget is spent on providing social care services to adults and vulnerable children.
How the Council’s revenue budget is allocated in the current financial year:
Budget for 2025-6 - Text version
- Community and Place £30.2m (12%)
- Children and Young People £74.6m (31%)
- Running the Council £25.9m (11%)
- Adult Social Care and Public Health £111.0m (46%)
How the Council is funded
The chart below shows our gross income from all sources. It illustrates that a relatively small proportion of our funding now comes from Government grants.
This total gross income does not reflect what we have available to spend on services - in the Net Revenue Budget most of this income is offset by the relevant expenditure. For example, the benefit subsidy supports the payment of benefits and is not funding available for local services.
How the Council is funded - Text version
- Government grants £49.3m (7.8%)
- Social Care Precept £30.2m (4.8%)
- Public Health grant £16.7m (2.6%)
- Benefit subsidy £53.3m (8.4%)
- Schools grant £91.5m (14.5%)
- Charging for services £45.6m (7.2%)
- Other income £122.5m (19.3%)
- Business Rates £84.8m (13.4%)
- Council Tax £139.5m (22%)
Our budget challenges
Balancing the books has become increasingly difficult in recent years as the Government has substantially reduced the amount of grant funding it provides to councils.
The amount of funding the Council receives from the Government has decreased:
Cumulative savings
This has meant that between 2014/15 and 2024/25 we’ve had to make a cumulative total of £188.9 million in savings.
The scale of these savings over such a long period makes it harder to continue to identify further costs reductions without impacting on services.
Current pressures
Our draft Medium Term Financial Strategy sets out our projected financial position over the next five years.
It looks at how we will manage local and national financial pressures, including rising costs and additional demand for services, while maintaining and improving services for Plymouth residents.
Delivering all our services within available resources is becoming increasingly challenging due to the ongoing pressures in social care services that provide vital support to, older people, vulnerable adults and vulnerable children and young people.
Social care services continue to see increasing demand and costs as more people need complex care packages and residential care. Costs are also increasing as we pay care workers the National Living Wage.
The legacy of the pandemic and the cost-of-living crisis are also contributing to a rise in homelessness and the number of families needing emergency temporary accommodation.
However, like all households, we are also seeing higher bills. Our suppliers are also passing on the impact of high levels of inflation, interest rates and energy prices.
Some of the main pressures we are facing this year:
Additional pressures - Text version
- Adult social care - Rising cost and volume of care packages £1.25m
- Homelessness - Increasing demand and costs, with record numbers needing bed and breakfast accommodation £0.38m
- Children's social care - Increasing demand and costs for supporting vulnerable children and young people £6.4m
- Home to school transport - Rising costs £0.348m
- Increasing interest rates - High rates increase the cost of borrowing to fund our capital programme £7m
- Increasing cost of waste services - To continue delivering waste services we require an additional £0.5m
Projected budget shortfalls
While we are still waiting for the local government finance settlement from central Government, we are currently projecting a £3.8 million shortfall in the funding we need for deliver services in 2025/26. This gap will need to be closed so we can set a balanced budget in February.
It is encouraging that the new Government has announced an increase in core funding for local government and has committed to multi-year funding settlements in future years, which will make planning ahead easier.
However, due to the ongoing pressures we are facing, we are currently anticipating having to take decisive proactive measures to reduce costs and spending to avoid a projected shortfall in funding that – without action – will reach £22.7 million by 2028/29.
How we propose balancing the books and protecting services
Our plans to protect valued local services by reducing costs and achieving savings include:
Efficiency
- Driving greater efficiency in everything we do, including reducing ‘back office’ costs of running the Council.
- Ensuring the departments running our services absorb the increased cost of rising demand and inflation through proactive management action and making efficiencies.
- Investing in robotic process automation technology to improve efficiency and turn data into intelligence.
- Continuing to find new ways to provide services, joining up with partners wherever possible and making best use of the Council’s assets.
- Using additional grants for social care announced by the new government.
Investing to save
- Tackling the high costs of providing temporary B&B accommodation for homeless families by investing in accommodation that we own. This will help save more than £1m a year.
Demand management and recuing reducing reliance on external social care placements
- Working proactively to reduce the cost demand pressures in children’s services and homelessness by proactively supporting families before their position becomes a crisis.
- Addressing the rising costs caused by a 15% increase in children and young people in Plymouth with an Education Health and Care Plan (EHCP) since 2021/22 by expanding capacity in our special educational estate, reducing reliance on independent special school places and improving capacity in mainstream schools.
- Looking at becoming a direct provider of residential care for children to reduce the costs of placements. Due to the national demand for places these costs can be very high.
Making best use of our assets
- Reducing our own office accommodation costs by exiting office buildings, generating funds from the properties and disposing of assets that are not required. For example, Midland House in the city centre has been vacated and the former register office on the Hoe has recently been sold.
Growth and income generation
- Continuing to drive growth in Plymouth’s economy. Supporting and creating jobs helps maintain income to support local services.
- Continuing to generate income through the Property and Regeneration Fund, which to date has seen £205m invested in 27 properties that have generated a net income return of £21m over eight years.
- Increasing fees and charges in line with CPI and inflationary pressures annually.
- Maximising grants and income wherever possible. As a city we have been very successful in attracting funding to invest in the city’s infrastructure.
Council Tax and social care precept
The Government funding models for local government assume that councils will be raise Council Tax at up to 3% each year and help address pressures in meeting their social care responsibilities by increasing the adult social care precept by up to 2% a year.
This assumption has been incorporated in our draft Medium-Term Financial Strategy.
We need your views
Please take a few minutes to give your views
Closing date: Wednesday 18 December