Cllr Rankin moves the coalition's budget motion

The Council's budget for 2014/15 was approved this afternoon. Here are the finance convener and vice convener's speeches in full...


Cllr Alasdair Rankin, Convener, Finance & Resources Committee

I am pleased to present the Capital Coalition’s second budget to Council today.  We have been through an extended but very worthwhile process to arrive at this point and I would like to thank Hugh Dunn, Head of Finance, and his team for all their hard work leading up to the finalised budget papers that we have before us today.  I would also like to thank my own team, Linda Fraser, Karen Blair and Susan Joyce, for the valuable support they have given to me and the Vice Convener throughout.

Economic background

The economic background to this budget is a little different from last year’s.  After a recession that has lasted longer than any in over 100 years, with real wages falling for longer than in any period in the last 50 years, we are finally seeing economic growth. It is, however, based on a tacit repudiation of UK government economic policy since 2010, with the stalling of deficit reduction since 2012, confirmed by the OBR, with the Funding for Lending scheme, greater activity in the housing market thanks to the Help to Buy scheme and higher consumer spending through reduced saving and higher borrowing.  But business investment remains low and export performance weak despite substantial devaluation.

There is no sign of the rebalancing away from the financial sector and towards the much stronger export performance that the government regarded as necessary for a healthy economy back in 2010.  There is, on the other hand, every sign of an election strategy.  For political and ideological reasons, however, I do not expect any greater support for local government services in the foreseeable future.In fact, both local government and public sector capital spending seem to be regarded as politically expendable.

Budget General

Members will know that the Coalition put its draft budget out to consultation in September of last year, two months earlier than the previous year’s draft budget and almost 5 months ahead of our consideration today.  We sent out over 40,000 letters and emails, conducted a wide range of public meetings and promoted live question and answer sessions on social media.

As with the previous year’s draft budget, we have responded positively to the representations we have received.  We have withdrawn or amended a range of proposals such as the increase in class sizes in English and Maths for years S1 and S2, the proposed reduction in funding for Additional Support Needs in education and we have made a positive amendment to the proposed reduction in funding for kinship carers and amended the proposal to share school librarians.

These changes coincide with a number of amendments proposed by opposition parties and all are funded within our overall balanced budget.  They demonstrate that we listen to what the people of the city and, indeed, other party groups have to say.  In addition, the Coalition has agreed to consider the case for an Empty Homes Officer and the case for use of money in the Council Tax Discount Fund for energy efficiencies. The Coalition therefore calls for reports on these matters to be provided to the Health, Social Care and Housing Committee within 3 cycles.

We will shortly be considering a report on the consultation process to see what improvements we can make and to ensure participation is as wide as possible in future years.

The Coalition has also agreed that funding to Police Scotland for community policing will remain at its previous level and that we will further develop and monitor a Service Level Agreement with the police which sets out the Council’s return for that investment.  In particular, it will set out how road safety training in schools will be delivered as well as other community policing activities.  It will be monitored by the Police and Fire Scrutiny Committee.

This budget reflects the Coalition’s priorities as set out in our 53 pledges to the city, not least that of responsible financial management, set within a 5-year budget framework and a Long-Term Financial Plan.

A common theme, compared with our previous budget, is that we have been able to avoid any substantial reductions across the range of Council’s services and have protected, in particular, health and social care and education.  The emphasis has been on securing savings in, for example, the Council’s procurement and our management of the Council’s property estate.

Since the launch of the Council’s ICT and Digital Strategy in December, we have been building the capability to move online a wide range of Council transactions and information flows with citizens, businesses, visitors and partners.  In the next few months, a responsive website will be launched enabling 30 digital transactions to be handled a wide range of devices, including mobile phones and SMART TVs. The ICT strategy, and follow-on developments, will both greatly improve access to services and bring substantial savings to the Council.

We are securing further savings through our internal improvement plans, better management of the Council’s workforce, in energy efficiency, by measures to maximise the Council’s income and in reducing sickness absence.  We are also working on the introduction of strategic energy projects with a view to mitigating energy costs and even feeding any surpluses into the national grid.

Additional funding of £23 million continues from the Scottish Government through the so-called “floor mechanism”, which provides that no Council receives less than 85% of the average per capita spend across Scotland’s councils, as well as the funding to support an additional 125 nursery hours for 3- and 4-year olds over the coming financial year.

The Coalition has also maintained its unallocated reserve of over £13 million to cope with emergencies and extreme weather events. There are no plans for any further substantial borrowing.

Progress since last budget

Since Council agreed its budget last year, we have protected frontline services by achieving greater efficiencies in the Council’s operations.  I will continue to emphasise that no area of the Council will be exempt from the need to maximise efficiency in the delivery of quality services to the city.

Although I am aware of recent opposition claims that outsourcing would have guaranteed larger savings I do not accept that such guarantees are as meaningful as they are presented.  For example, once the Council had committed to outsourcing contracts it seems unrealistic to suppose that over the lifetime of those contracts there would not be changes of scope or renegotiation that would have materially altered the balance of advantage.  As I mentioned last year, there are Conservative Councils in England that have not had entirely happy experiences with outsourcing.

Wherever possible, we will also drive up our ability to generate income and we have a well-established member-led work stream focusing on that objective.

Also, I expect that, for the current financial year, consistent with the latest revenue figures reported to the Finance and Resources Committee, we will again achieve a balanced budget, both across the Council as a whole and for each department.

The administration continues to invest in the city.  Work is under way on the new £37 million James Gillespie’s High School; we will be investing £35 million in the new Boroughmuir High School on a new site as well as setting aside the funding for St John’s Primary and St Crispin’s.  We have also overcome the legal obstacles in the way of building a new Portobello High School for which funding is in place.

In this coming financial year we will invest nearly £16.5 million in maintenance of roads, footways and carriage ways.  We continue to deliver on the Council’s economic strategy, creating or safeguarding over 4000 jobs, to support over £200 million of physical investment and we continue to support the Edinburgh Guarantee, which has contributed to the city’s highest-ever rate of positive destinations for school leavers.  The Coalition has also identified the means to create a £7.5 million Strategic Investment Fund, which will aim to maximise a return to the Council.  This demonstrates the importance the Coalition attaches to the economic development of the city in which we are pleased to recognise the prominent role of the Lord Provost’s office and that of other city leaders.Other major investments include the £120 million 21 Century Homes programme which is building 1000 affordable homes in the city and over £48 million being spent on improvements to existing homes.

The tram project is now progressing in line with its revised budget and schedule, with testing of rolling stock, signalling and infrastructure well in hand.

The Coalition has substantially strengthened financial control and scrutiny.  We have engaged an external partner to develop the internal audit function.  The Corporate Programme Office is now well-established within Corporate Governance providing an assurance review service for all major Council projects.  In addition, the Governance, Risk and Best Value Committee provides for a substantial member scrutiny role.  These are all welcome developments.

Shared Repairs

The Capital Coalition is also dealing with the outstanding issues around the closed Property Conservation Service, including unbilled work and a resolution process that will be legally sound.  Much of this work is painstaking and must to be done to a standard that will lead to a successful closure of all the legacy issues.  As members will know, the new Shared Repairs Service has been operating successfully since April.  We are now developing the basis for an enforcement service that takes fully into account the hard lessons of the past.  It will become operational in the course of this year and will be subject to regular scrutiny.

Whilst there will be a base level of costs, our intention is to make the new service as self-financing as possible.  The overriding aim will be to encourage property owners to take responsibility for shared repairs themselves but to provide assistance where there are difficulties in achieving the necessary level of agreement and cooperation.

Risks to budget

There are undoubtedly risks to the Council’s finances in the years ahead.  There is a growing need for care services to the elderly as the population ages, pressure arising from the Westminster government’s welfare reform measures, including greater rent arrears and the potential for more homelessness which the Council has a statutory duty to address.  One of these risks was substantially mitigated recently when the Scottish Government accepted a Labour amendment to the Budget Bill in Parliament. Under the amendment, the Scottish Government has agreed to provide an additional £12 million to cover fully the cost of the bedroom tax if the Department of Work and Pensions agrees to raise the funding cap.  The matter now rests with the DWP.

Other risks arise from an increasing birth rate, leading to higher primary school rolls and we have seen substantial increases in energy costs and in contractual commitments.  The Coalition will also want to look carefully at Health and Social Care Integration to ensure that the Council achieves value for money and that the Council’s financial position is protected.

Future budget development

The Coalition will have to address these risks at a time when it also needs to make very substantial savings over the next four years: £36 million in the coming financial year, £30 million in 2015/16, £38 million in 2016/17 and £16 million in 2017/18.  This is, it perhaps goes without saying, a huge challenge with fundamental implications for the way the Council does business.  Whilst we will continue to aim to deliver vital services to the people of the city to the greatest extent possible, we are developing ways of radically improving efficiency and reducing costs.  I have already mentioned some of these, such as workforce management and income maximisation but a range of business cases across all the Council’s activities are in development right now under the BOLD project and will be reported to Council in due course.

Conclusion

The Coalition’s priorities remain as before and as set out in our pledges to the people of the city.  Some have been achieved and we have made substantial progress with others.  Nonetheless, greater challenges lie ahead and they are likely to involve difficult choices.  We are determined to deal with them effectively in order to protect services to the greatest extent we can and in a manner consistent with our values.


Cllr Bill Cook, Vice-convener, Finance & Resources Committee

On coming to power the Capital Coalition pledged to be open and transparent about the City’s finances. We promised to be open about budget choices and decisions.

The Capital Coalition have kept that promise. Five months ago we published detailed budget proposals for 2014 to 2015. Well over two hundred pages of information were released prior to the public consultation.

Since then there’s been any number of consultation engagements, some difficult conversations, some challenging public meetings and some pretty impressive and constructive feedback. This is the essence of democracy. Edinburgh’s people have every right to challenge and influence our proposals.

The Capital Coalition would therefore like to thank everyone who has engaged in the process we initiated last September. We also very much appreciated the contribution from today’s deputations. The contribution from Edinburgh’s people has fed directly into the final budget proposals we’ve table today. The Capital Coalition have also taken account of representations made by opposition parties.

As a direct consequence of public feedback we have amended or deleted a number of proposals in the draft budget.
In addition today we’ve agreed to a number of points from the Green Party.

I would like to thank all those who worked hard in putting together the budget and public consultation. In particular I would like to pay tribute to the Hugh Dunn and his finance team; public service at its very best.

Before the inevitable party political debate begins I would also like to thank opposition members for their constructive contributions to the various finance committees and in the discussions preceding today’s meeting. Their contribution is greatly appreciated.

Putting detailed budget proposals into the public domain some five months in advance is unprecedented. It reflects a sea change in tackling the City’s finances. As with last year these were set within the five year budget framework. The Capital Coalition’s commitment to long term financial planning and strategic thinking is indisputable.

Within days of initiating this budget round last September the coalition established the BOLD initiative to look well beyond the budget we are debating today.

In framing the City’s finances we have set some pretty tough criteria; deal with the growing demographic pressures, minimise the impact on the public, invest in the future, value the workforce. In an age of static funding this is essential.
As a consequence of this focus…. net spending on Children & Families and Health & Social Care will actually increase.

The five year framework includes more than £50m extra to meet the growing demands to support the elderly, the vulnerable and increased school population.

In serving our citizens the most important asset this City has is its workforce. And by that I mean all those involved in public service. Whether this be those directly with the City Council or that vast army of people in the third and private sectors who provide a range of invaluable services to Edinburgh’s people.

We are actively engaged with the third sector with the aim of establishing long term, stable, secure and fair provision of services. Consistent with Capital Coalition Pledge No. 25 we will continue to promote the living wage in our partner organisations and amongst commercial suppliers.

Our commitment to our people (our workforce) is underpinned by action. I believe our actions speak louder than words. Since we gained power we’ve:

- Introduced the Living Wage.
- Settled on equality pay.
- Mitigated Modernising Pay.
- Honoured national pay negotiations.
- Ended the pay freeze.
- Introduced a policy of no compulsory redundancies.

Speaking as a Socialist I’m proud that the welfare of workers and the people we serve is at the forefront of the Capital Coalition’s thinking.

The Council undoubtedly faces continued challenges and risks. Whilst today’s budget contributes to a very significant narrowing of the projected funding shortfall its essential the relentless drive for improved effectiveness continues.

Everyone can contribute to this; each and every employee, our Heads of Service, our Directors, my political colleagues, everyone should play their part in ensuring that a Corporate approach is taken in tackling these challenges. Only by doing so can we continue to protect and serve our people.

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