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Opinion: Explaining the financial situation at Preston City Council

Posted on - 21st February, 2016 - 8:00am | Author - | Posted in - Preston Council, Preston News
The sky is anything but blue at the Town Hall right now... Pic: Jason Connolly

The sky is anything but blue at the Town Hall right now… Pic: Jason Connolly

You’ve probably heard this one before, Preston Council’s grants from central government from 2019 onwards will be nil, zero, zilch, but I’m afraid it’s no joke.

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The grants, reduced from £19 million pounds in 2010-11, are not much different to the council’s current total spending of £21 million. To truly understand what this means for Preston, you have to understand exactly how Preston City Council is funded.

“Council Tax” I hear you shout!

Well yes, but it may surprise you that council tax funds less than half the services provided by the council. In 2019, council tax is predicted to provide £11.3 million of the council’s £24.9 million budget requirement.

Business rates is the next largest income stream, another £5.5 million by 2019. A payment called New Homes Bonus comes next at £3.5 million (this is government funding but it’s a redistribution of money already cut from councils and divided up based on how many new homes are built in your area), that’s £20.3 million in total if you’re keeping count.

The council does have other income streams from ‘profit making’ services like car parks (£1m) and business properties (£2m). In 2018 however, Preston Council’s income takes a significant hit from the expected closure of the market car park due to the Indoor Market scheme and the end of an agreement with Lancashire County Council over subsidy of waste collection, totaling almost £2 million.

Give or take a myriad of other smaller incomings and outgoings, This leaves Preston Council (prior to any new savings proposals) approximately £4.5 million pounds a year short of balancing the books in 2020 and if it wasn’t for the cash reserves (local government speak for savings), then we would be effectively bankrupt now.

Despite all these figures, I still haven’t explained what this really means for Preston.

Well, the Cabinet already have figures that suggest a maximum of half a million pounds could be saved from reducing services that we are obliged to provide by law, like planning and licensing, bin collection, homelessness support etc and it is debatable whether this would leave these services fit for purpose.

This means that the other £4m of savings must come from services that the council don’t have to provide (and some of these may surprise you), like parks, leisure centres, Harris Museum, benefits and debt advice, community engagement and grants to the charity and voluntary sector among others. These cost around £5 million a year, so you can see there wouldn’t be much left.

In reality of course, the council can’t go bankrupt because the City Treasurer would inform the government and they would send auditors in, who would be far more ruthless than the councillors.

So, unless the council can increase its income or find more creative efficiency savings, then every single park, play area and open space is under threat of being abandoned. The only two public swimming pools in the city could lose their subsidy. The work of the sports development team, who attract five times more funding than they cost, could end. The advice services, who literally keep people off the streets, could disappear. The Harris could close and the Mayoralty and it’s attached civic functions are highly likely to fade into the mists of time.

This is not political spin. It’s real and it’s happening right now, but that’s not all…

The government are about to consult on re-engineering two of our income streams; business rates and New Homes Bonus. Every review of local government funding streams since 2010 has resulted in a worse position for Preston.

To rub salt into already stinging wounds, the government recently divided up an extra £300 million pounds to help councils in this transitional period. Preston got nothing.

So it’s about as grim as it gets in the Town Hall, but that doesn’t mean that we have given up., far from it.

We are lobbying government on our financial settlement since they are counting some of our New Homes Bonus twice in our ‘spending power’ calculation. We have a little leverage because we are delivering one of their flagship policies, the country’s first City Deal. Every alternative for service provision is being looked at before cuts are implemented. Income streams will be maximised where feasible in order to save precious services.

Our ‘Fairness’ agenda is flourishing, the credit union, Guild Money, is expanding, to try and achieve a sustainable critical mass that will be an invaluable asset to the city. Our Community Wealth Building program is a relatively low cost project that is now attracting EU funding and could divert up to £1 billion into the local economy and create businesses more resilient to economic peaks and troughs.

If you want to help, use our leisure centres, the Harris Museum, Preston Market, our car parks, hire our skips, sign up for the green waste collections at just 50p a week, use businesses that rent property from the council. This is money that the government cannot take away from us. It might just save your local play area or community centre. I believe that we have many services worth preserving, even if the government don’t. I hope you agree?

This is a guest post from councillor Martyn Rawlinson, cabinet member for finance and resources on Preston City Council

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