Link Editor Jamie Hill sat down with Swindon Borough Council’s Cabinet member for Finance, Kevin Small, to discuss the state of the finances they inherited from the previous administration.
When austerity was first mooted in 2010 by the newly-installed Conservative-Lib Dem coalition Government, it was meant to be a temporary measure intended to right the wrongs of the 2008 financial crash. A short, sharp shock if you will.
But 13 years later, there is still no end in sight to local government funding cuts. Swindon Borough Council has seen Central Government funding drop by almost 40% in real terms during this period. And with councils like Birmingham City having to declare a Section 114 Notice a few weeks back, following Woking, Northamptonshire, Croydon and Thurrock, Swindon Link delved into Swindon's finances.
Here are the headline figures -
- Swindon Borough Council won’t be issuing a Section 114 Notice and won’t be going bankrupt
- By the end of this financial year (23/24) there will be an overspend of £10m
- Next financial year (24/25) the council faces a shortfall of around £27m
Swindon Borough Council is not in a great position.
It seems to have been death by a thousand cuts over the past decade or so.
For us residents, who have seen council tax rise by its maximum five per cent year on year, we all seem to be paying more for less, which is a mite frustrating.
For the Labour administration, who only took over from the Tories at the May local election, it is the biggest problem they face.
How are they supposed to make a difference with their hands tied behind their backs as there is essentially no money?
Kevin Small is the man tasked by Swindon Borough Council to try and navigate us all through this financial quagmire, having been appointed to the role as Cabinet Member for Finance.
The first thing he wants to address is that Swindon Borough Council won’t be going bankrupt any time soon.
“We’re not in any Birmingham or Northamptonshire County Council situation of needing to have a notice served on us.
“We’re a long way from that and I don’t think we’ll ever be in that position although I know you can never ever 100% guarantee anything.
“At the present time there is a forecast for the end of the year 23/24 of overspending of around £10 million. £9.887 million to be exact.”
According to Cllr Small the shortfall for this year has mainly been caused by a large overspend in Children’s Services, one of the council’s statutory duties. The overspend came down to two factors - the main one being an increase in demand.
“We can’t control the increase in demand. Children need to come into care and they need to be looked after. In an ideal world it would be great if less children needed those type of services but it has gone up so the cost has gone up.
“The other contributing factor was the previous Conservative administration setting, what I still believe, unrealistic saving targets within that department to balance the budget. We’re seeing those saving targets not being delivered.
“There’s also a £3 million overspend in Adult Services and again that is mostly related to an increase in demand in the adult care service.”
Both Children’s and Adult Services are statutory duties. Statutory duties make up for more than 80% of the council’s budget, meaning over the past few years non-statutory duties have been the areas that have seen the most cuts.
Cllr Small added: “We’re lucky so far that we’ve had the benefits of the increase in interest rates. We’ve not had to borrow so much, so there’s been a saving there and also that our capital programme has been delayed so there is money that would have been invested in those capital projects that has been sitting in the savings account and therefore has had more interest and that has given us just under £5 million dividend to count against our fixed expenditure overspend.”
But it’s next year (24/25) that is the scarier figure as SBC will be facing a shortfall of £27 million.
“We’re looking at the possibility of £27 million that will need to be found to balance the books.” Cllr Small confirmed. “That is made up of the overspend from this financial year and other pressures on services, inflation, and also salaries that gets us to £27 million.”
According to Cllr Small the real-term funding cuts that SBC has had to face since 2010 is 40%.
He said: “When I first started in local Government back in the 80s, councils used to get a support grant that worked out at about 50 to 60% of council expenditure and it was still around the 50% mark or just below when The Conservatives came to power in 2010.
“But now the grant from The Government only makes up about 5% meaning that more and more of our funding has to be taken from council tax rather than from general taxation.
“The vast majority of our budget has to be put towards our statutory duties.
“Because of austerity, councils have had to cut non-statutory duties to balance the books. We will be going through a similar exercise again this year to find that £27 million.
“The vast majority will be from non-statutory services. You look to try and get better value for money from statutory services, delivering them in a different way making them more cost effective. But it remains that we have to continue to produce those services no matter what.
“So in reality most of the money will have to be found through cutting non-statutory services. More people will get to see the cuts to those non-statutory services. They’re more visible.
“People are able to see the demise of local government caused by the last 13 years of austerity from the Conservative Government.”
Swindon Borough Council are going through the budget this Autumn to see how they can fill that £27 million gap.
Cllr Small said “We’re hoping that we can come up with something that has as little impact as possible. To do the best for the people of Swindon. But it’s not going to be easy.
“We’ve always said that we would keep council tax as low as possible. It was one of our pledges. But we’re also going to have to strike a balance as to what we need to do to keep going. It is our intention to try and do that.
“But the financial burden remains on councils because of the lack of funding from Government, so every year you have to go to the maximum limit because of the need to balance the books.
“Either that or have an even greater round of cuts in council services.”
According to Cllr Small, 1% of council tax roughly works out at just over a million pounds of income for the council, so if they don’t put up council tax by 1%, there would need to be a million pounds of cuts to be found to support that.
“It’s a balance. We wish we were in a position where we could look at it in a way that we didn’t need to increase it just to keep the providing the services that we do provide and be in an enviable position of deciding to increase council tax to provide additional services rather than staying the same or keep the increase as low as possible.
“In reality, though, because of the savage cuts over the past 13 years with the Central Government grant being lower, councils have had to increase council tax to offset that shortfall.
“We don’t know what the Central Government grant will be for next year yet but if it’s in line of the last few years, it won’t be enough.”
There is currently a fair funding review being carried out to look at how the formula is worked out by Central Government for local government funding. But the results of reportedly won’t come in until 2026.
“I think we’re possibly going to have a new Government by then. That would be a good thing as the formula currently is worked out with a Conservative slant and you would hope Labour would be a bit fairer. In summary though, I see nothing that would suggest that we would be anywhere near 114.
“A lot of these problems in Birmingham came from the Equal Pay claim and Northampton was bad investments. But we’re nowhere near that. We’ve got concerns about the level of borrowing we have as a council as it’s high. But at the same time we’re not in a position where we won’t be able to find the £27 million needed.”
“It is frustrating that we’re so constrained by the finances,” added Cllr Small. “If we had the money we could make huge changes tomorrow. We knew it was going to be tight. We knew realistically that you have to work within the financial situation that you’ve been given.
“But we’re looking at opportunities which are either cost effective in the sense of can it be done within the present budget or you are able to spend the money in different to still be able to provide as good a service.
“We are also looking at other approaches. For opportunities that aren’t directly fed in from council tax to provide the services that we want to provide.
“We’re looking at how we can invest in the town centre but that doesn’t automatically mean the funding comes directly from taxpayers' money. Essentially it means we’re looking at being able to support and become the facilitator rather than the financier of some of the schemes to make the changes we want to make.”
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