Newham’s Budget Challenge – Q & A’s
Background
What are the savings the council needs to make?
We need to make £50 million savings to our budget next year. This is more than we currently spend on cleaning and lighting our streets, collecting the bins and running our libraries combined.
We will also need to save more money in future years, as we will need to save around £91 million by 2019.
Why does the council need to make these savings?
We need to make these savings due to continuing deep cuts in the funding the Government provides us to help deliver our services as well other cost pressures including rising demands on our services.
Despite being one of the country’s most deprived boroughs, Newham is being hit hard by the Government’s funding cuts. Next year we will receive £284 less for every home in the borough, while Richmond Council, in a wealthier area of London, will only see its grant cut by just £57 per home.
These latest cuts are on top of the £106 million reductions in our government funding we have had over the last five years.
What is the council’s current budget?
Our budget this year for running the day-to-day services is £255 million. This excludes our major capital investment in schools, housing, regeneration projects and transport schemes for example.
Where does the council get its money from?
More than half of the money we use to run our services comes from the Government either through a grant - called the Revenue Support Grant - or through our share of nationally shared business rates. Together these make up £156.4 million of the £255 million funding for services.
Council Tax makes up around a fifth of our spending on services, with the rest coming from the business rates we are allowed to keep locally.
What does the council spend its money on?
We deliver a wide range of services for our residents including street cleaning, rubbish disposal, libraries, community and leisure centres, housing, trading standards, and looking after vulnerable children and adults in our community.
Nearly half of our budget last year was spent on supporting older, mentally ill or disabled people (£87.8 million) and vulnerable children (£52 million).
We also provide a range of services that other councils do not. These include:
- Every Child programme – which helps provide our children with the best start in life through supporting sports, music, educational attainment, activity and achievement;
- free school meals for every primary school pupil;
- Workplacewhich has helped more than 27,000 local residents take advantage of job opportunities created as a result of regeneration schemes taking place across the borough.
Savings/investments
What has the council done to save as a result of the £106 million cut in Government funding since 2010?
Over the last five years we have taken many steps to ensure we have been able to protect the services that matter most to our residents despite the funding cuts we have faced. These have included making savings in our back office services, reducing the number of senior managers, renegotiating contracts with suppliers and sharing services with other councils.
Why did the council invest in the Dockside building if it needs to save money?
Moving our support services into one building at Dockside in 2009 from 26 different locations helped us save around £50 million by 2014. Many of the buildings our services had been using were becoming unfit for purpose or were expensive to run.
Having one single main office ensures we are able to provide residents with more co-ordinated and efficient services. Around 20 per cent of Newham Dockside is rented, at market rates, to private companies. The rented share is set to rise as the council continues to reduce its staff and management through efficiencies.
Why did the council invest in the Olympic Stadium?
We have invested in helping transform the Olympic Stadium into a multi-purpose venue hosting athletics, football, rugby, motor sport and concerts amongst other activities to ensure it continues providing a lasting legacy of the 2012 Games for our local community.
We provided a £40m loan investment to E20 Stadium, the company set up by the London Legacy Development Corporation (LLDC) and Newham Council to manage the Olympic stadium, which is repayable with interest. In return our residents have a 35 per cent stake in the Olympic stadium for the next 102 years.
As a result we have secured and are already reaping benefits for our residents including jobs, free tickets, community athletics and community days in the Olympic stadium.
This year alone almost 7,000 residents will have been to the Olympic stadium for free for events including the Sainsbury’s Anniversary Games, Rugby World Cup and Great Newham London Run.
On top of this we have secured year-round access for school clubs to a new floodlit community track that will also be home to the Newham and Essex Beagles athletics club, ten exclusive mass participation events in the Stadium per year for Newham residents, a training and education centre in the Olympic stadium, and three quarters of jobs created at the Olympic stadium will go to Newham residents.
Will more services be put online to save money?
We are committed to ensuring our services are as accessible as possible to our residents whenever they need to use them.
Making our services available online gives our residents the chance to access the information they need 24 hours a day, 365 days a year – just like most shops and banks.
Most of our residents have access to the internet, but those who do not can book time on a computer in one of our libraries where they can enjoy free WiFi and internet access.
We will however always endeavour to support vulnerable residents to be able to access the council services and information they need.
Will my Council Tax go up?
We hope not. Newham Council has frozen Council Tax for the last seven years, and has the lowest Council Tax in Outer London. Due to the savings we need to make we will need to look at every aspect of our budget, but our aim remains not to add any unnecessary financial burden on to our residents.
Does this mean cuts to Housing Benefit/Schools/the NHS/the Police?
These are all areas which the council doesn’t control or fund. Central Government makes the decisions as to what happens with these budgets.
Housing Benefit – the Council administers Housing Benefit but it doesn’t make the rules as to who is eligible for it, or how much they can receive. Housing Benefit has been subject to cuts since 2010, and if further cuts are made it will be due to central Government decisions, not decisions by the council.
Schools - The Government doesn’t give the council any control over the money that goes to schools.
The council does choose to invest some of its funding so that we can give Newham children the best start in life and help them develop the skills needed for their future working lives. That goes on things like children with special needs, children’s centres, free school meals, and Every Child a Musician. This is separate from the main money that pays for school buildings, teachers, and so on.
Health and the Police - The council isn’t responsible for the NHS or the main police budgets, though we regularly work with them to enhance the lives of our residents. However, we do at present fund a number of police officers through an agreement with the Metropolitan Police, so we can help tackle the issues and concerns raised by local residents. The funding for this comes from the council’s General Fund, which is being cut.
Why not use the council’s reserves to cover the cuts?
Councils do not have vast amounts of money in reserves which could be used to cover the impact of the government’s cuts. Reserves are there to ensure councils are able to cope with any unforeseen issue or emergency.
The vast majority of our reserves are already allocated to our schools or supporting specific projects. We have a small amount of money in reserve. This money can only be used once – so if it was used to minimise the impact of the cuts there would be no money available to cope with an unforeseen or emergency situation.
Will there be redundancies?
It is too early to predict if there will be any redundancies as a result of the savings we need to make and if so how many there would be. If we do not find more efficient ways to deliver services, including reducing staff numbers over time, then compulsory redundancies would be more likely.
At the core of everything we do is ensuring we provide effective and efficient services for our communities and protect our frontline staff where possible. We will continue working with our employees and unions to continue driving forward this commitment.
Will member allowances and the salaries of the council’s senior managers be reviewed?
Any senior officer earning more than £100,000 has had their pay frozen since 2010. The salary of all other officers at the council is governed by a national pay agreement which has seen a pay freeze from 2010 to 2014 followed by a two per cent increase in 2015.
The level of allowances for the Mayor and all councillors are based on recommendations made by an independent panel established by London Councils, which represents all of London’s 33 local authorities.
The basic allowance for councillors has risen by one per cent since 2009/2010, while the levels of Special Responsibility Allowances paid to members of the cabinet and mayoral advisors were frozen between 2009/2010 and 2013/2014. The Mayor does not take his full annual allowance but donates an amount to charity each year.
What about members’ pensions?
Members no longer currently receive a pension, this follows on from a government decision last year to ban elected members from the local government pension scheme. We are looking at options to develop proposals for setting up a Newham Pension Fund that applicable members could join.
The scheme would act as an inducement to attract a wider range of economically diverse and younger candidates, who would help improve representation across the borough and enhance democracy. In addition, the scheme would make it easier for existing councillors to take on more time consuming posts meaning they would need to spend less time working outside the council.
Will the council seek to outsource its services?
We are committed to becoming a more effective commissioning organisation and will continue to be as innovative as possible to ensure residents receive the most effective and efficient services.
Outsourcing services to large companies does not automatically lead to savings or better services. We are working with our staff to implement different models of delivery for our services such as making them small businesses in their own right which we believe will not only provide more efficient but also better services for our residents.
Will you be looking to share more services with other London authorities?
Our partnership with Havering Council to share back-office services, oneSource, saved the council £5m in 2014/2015, By 2018/2019 it is estimated it will achieve the cumulative savings of £41 million.
The services which come under oneSource include HR, finance, payroll, legal, and information and communication technologies (ICT).
We are fully committed to continuing with oneSource, and are open to sharing services with other councils as a way to save money without affecting our frontline services. oneSource is currently exploring whether the arrangement can be strengthened, including expanding it to other councils.
Will the cuts mean more closures of services as happened with the closure of the Focus E15 Foyer?
The reasons for the closure of the Focus E15 Foyer Mother and Baby Unit in 2013 is continually misrepresented. East Thames, the landlord of the Focus E15 Foyer, made a decision to close the Mother and Baby Unitand move on the families living there into their own accommodation.
The foyer is intended as short term accommodation with appropriate levels of support, based on individual need. East Thames undertook individual assessments and judged the families ready to move on to independent living, with additional support where required and the council supported these moves, assisting with sourcing affordable and appropriate move on accommodation.
Every family from the original group who wanted to stay in London was assisted to find independent accommodation in London, with the vast majority in Newham. The council paid the deposits for that housing as well as covering incentives to landlords.
Will you be reducing the frequency of the Newham Mag?
No. We need to make all of our services as efficient as possible.
The Newham Mag is our main way of informing residents of a range of issues including who their councillors are and how to contact them, how to use local services, details of consultations we or other public bodies are carrying out and details of upcoming community events.
It is also used by a wide range of other organisations including Newham Clinical Commissioning Group, the London Legacy Development Corporation, the Mayor of London, Metropolitan Police, Transport for London, the NHS, Greater London Authority, Public Health England and London Fire Brigade to inform residents of important issues.
Around two thirds of our residents say the Newham Mag is the most common way they find out what the council is doing and 85 per cent of residents feel the Mag is useful.
Will you be stopping the council’s free events?
We have cancelled the Waterfront Festival and will keep our other community events under review.
Our programme of free events helps continue to build community spirit across the borough. More than 50,000 people attended the Mayor’s Newham Show this year and last year nearly 150,000 attended all of the free, family-friendly events the council staged.
Why do you spend so much money on projects like the Every Child programme?
Our Every Child programme helps our children achieve the best possible start in life through giving them the opportunities children in other areas enjoy. It also supports educational attainment, activity and achievement:
-Every Child a Musician is the largest and most successful musical programme in the country, with 10,000 Newham children benefiting from free lessons for three years;
-Every Child a Sportsperson gives every year 7 student in Newham the chance to choose from 20 different sports through a free activity programme which helps them identify their sporting talents;
-Every Child a Chess Player aims to give every Year 2- 5 child in Newham state primary schools the opportunity to learn how to play chess which helps them develop skills outside of traditional learning;
-Every Child a Theatre Goer gives all primary and secondary school children the chance to go to the theatre free of charge which helps them developtheirlearning inliteracy, literature, creativity, issue-based learning and citizenship skills;
-The Newham Reading Guarantee helps five to seven year old children improve their reading. It supports the teaching of phonics and pays for children to receive one-to-one support if needed
-Free School Meals – we fund free school meals for all our primary school children as evidence shows it helps them learn more effectively and get better grades, particularly in maths. It also saves parents more than £500 per child, per year after tax. Our initiative was so successful it was introduced nationally in infant schools by the coalition government last year.
Why did the council use Lender Option Borrower Option (LOBO) loans?
Like all local authorities we borrow money to make capital investments such as improving our council homes through investing in the Decent Homes Programme, highways and school improvement projects.
We make borrowing commitments on the grounds that they are prudent, affordable, sustainable and protect the council from changes in interest rates. We fully comply with all accounts and audit regulations including the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on treasury management.
Between 2002 and 2009 we refinanced our debts to take advantage of lower interest rates available through a series of Lender Option Borrower Option (LOBO) loans from banks. As a result the council saved £65 million on our borrowing portfolio.
We have ensured that our borrowing protects our finances from a variety of different interest rates expected over the lifetime of the loans. Going forward the council is required to borrow to fund its capital programme and will endeavourto secure the best available rates as the need arises.