Agenda item

On 7^th September 2011 the Council’s Executive agreed a paper on the “Council’s Financial Strategy for 2012/13 to 2015/16”. The staff side would like to discuss the implications and meaning of the report

Please find appended to the agenda pages 63-92 of the report to the Executive held on 7^th September 2011.

On 7^th September 2011 the Council’s Executive agreed a report on the “Council’s Financial Strategy for 2012/13 to 2015/16”. The Staff-side had requested that the implications and meaning of the report be discussed at the meeting.

The Chairman welcomed the Council’s Finance Director, Mr. Peter Turner and the Head of Corporate Procurement, Mr. Dave Starling, to the meeting.

The Staff-side Secretary stated that he had two areas of concern regarding the Council’s Financial Strategy. He had attended the meeting of the Executive at which this decision was approved regarding the future management of the budget. He felt that the Council must protect frontline services and use the Council’s reserves to underpin the budget if necessary. Management had inferred that reserves would not be used so he had been surprised to see the proposal to use £14m for “invest to save” initiatives and £10m for the regeneration/investment fund. It appeared that the Council was happy to ‘gamble’ by buying investments such as high street businesses but this would not protect jobs. With regard to “invest to save”, he was happy to use it for in-house or in-Borough provision but was concerned with the suggestion of using loans. He asked who the loans would be made to.

The Staff-side Secretary’s second concern was the attempt to frontload Council savings for years 3 and 4 which would hit employees now, at the beginning of another period of recession, rather than later. It was noted that a General Election might cause a partial or complete u-turn from the Government regarding public sector funding as the cuts to public sector services would make the Government increasingly unpopular with the public. Therefore the Council could hold fire with the proposed frontloading to see how the Government reacted instead of the “slash and burn” approach advocated by the Council which would lead to cuts in services and reduction in the numbers of staff. 110,000 public sector jobs had been lost nationally in the last three months.

The Finance Director advised with regard to the reserves, due to the low interest rates, earnings from the reserves were quite low and the proposals had been designed to find a higher return. The increased income would be used to protect frontline services. Investment initiatives would be approved on the merit of submitted business cases and therefore it could not be called ‘gambling’. The investment would have to supply income and capital value and provide wider regeneration. The ‘invest to save’ principle would protect frontline services in the long term. If the reserves were used in the way suggested by the Staff-side Secretary then the money could only be spent once. The ’invest to save’ money could be used as a wider investment fund. The Council must achieve sustainable financial management. The frontloading proposal would give the Council time to consider and make the correct decisions. It was too much of a risk to wait for the Government to make a full or partial u-turn and any change in direction from the Government would cause the Council to have to implement ill-thought out, quick decisions.

The Chairman noted that ‘gambling’ with taxpayer’s money would be the last thing the Council would do.

Councillor Colin Smith stated that he had sympathy with a number of the points raised by the Staff-side Secretary. However, the Council must find ways to get a better return on its reserves and many of its choices would be unpalatable. Bromley had spent 13 years being on the wrong side of Government and had suffered financially in comparison to other London Boroughs as a result. As a consequence the new “one size fits all” cuts being implemented had disproportionately affected the Council. Councillors had been lobbying to bring the Government’s attention to the Council’s position. The Council must protect vital services and reserves would only last two years if used to directly fund these services. It was possible, for instance, to sell a farm, but the income generated from the property may be worth more to the Council in the long term than a short term one off payment.

Councillor Bosshard pointed out that the economy was not in a period of depression but in a long period of austerity which may last for ten years and there was no quick fix available for what was a worldwide state.

The Staff-side Secretary stated that the Council must invest to escape from the recession. The “slash and burn” policy had not worked in Greece. The United States of America had been investing a huge amount of money in their economy. The Staff-side Secretary accepted the good intentions of the Council to obtain a better return but gambling on retail returns was too risky. With regard to frontloading, the Council had made a two year plan and he felt that a breath should be taken before moving onto years 3 and 4.

The Chairman reminded the Committee that the cuts had been forced upon the Council by previous Governments and the Council was trying to address the deficit in funding and to balance the books. He stated the Councillors would keep the Staff-side Secretary’s concerns in mind.