Cambridge City Council has released details of proposed savings which it is having to make following losses of the money from online sales of folk festival tickets and as a result of its investments in the collapsed Icelandic banks. The proposals have been made public in advance of a meeting of the council’s executive on the 29th of January 2009.
A major area of cuts is in “Section 106″ accounts which hold money paid to the council by developers lieu of the developer providing community, social and recreational facilities within new developments. Much of this money is spent on a local level, by ward councillors on area committees and it is used to make “environmental improvements” which range from improving pathways to traffic calming schemes. Works on the Penny Ferry car park in Chesterton were recently given the go-ahead under this scheme. A total of £645,800 is to be lost from these budgets in 2008-10. While the council can’t redirect the developers’ funds, these accounts have been accruing interest which was available to be spent on improving Cambridge, it is this interest derived element which is being redirected to the “general fund”.
Councillors at the North Area Committee on the 22nd of January 2009 scrapped two projects which Liberal Democrats had previously been very much in favour of:
- Arbury Road/Milton Road shop forecourts (£180,000)
- Windsor Road/Histon Road shop forecourts (£150,000)
Having obtained agreement to strike these off Ian Nimmo-Smith the leader of the Council said: “Let’s face reality”. Personally I have never been in favour of spending this money to improve private property before the council had exhausted other ways of persuading the owners to carry out improvements. Councillors might those cuts were required to bring the total back within the original budget, but that would only be the case if they did all their other proposed projects before the end of 2008/9 which is very unlikely.
Those not wanting S106 money spent on projects which will result in the loss of green space on Jesus Green might be among the few able to see a potential positive side to these proposed cuts, though we are yet to see which projects under discussion will not be funded.
Many environmental improvement projects in Cambridge contain elements intended to improve conditions for cyclists. Cyclists will lose out from both from the cuts in this budget and another of the City Council’s major measures – the deferral of £250,000 intended to be spent on cycleways.
The council has been able to cut staff training by £75,000 in 2008/9 and £125,000 in 2009/10, and reduce its publications, marketing and advertising spend by £75,000. The council places money in a reserve each year to enable it to renew Microsoft Office software licenses, it has decided not to place the planned £100,000 in that fund this year and delay upgrades.
|New Proposed Cuts, January 2009|
|Section 106 interest removed from accounts||£462,650|
|Cycleways Capital Programme (“reprogrammed”)||£250,000|
|Section 106 interest – not to be available for projects 2009/10||£138,000|
|Human Resources – reduction in courses/conferences/seminars 2009/10||£125,000|
|Saving due to delaying upgrading Microsoft Office||£100,000|
|Human Resources – reduction in courses/conferences/seminars 2008/9||£90,000|
|Reduction in publications, advertising and marketing, per year 2008/9||£75,000|
|City Services computer and building repair and renewal||£55,000|
|Section 106 unspent interest recovery||£45,150|
|Strategy Officer – Not to fill vaccancy||£27,300|
|Strategy Manager (Growth) – not to fill vaccancy||£25,530|
|Councillor training on planning 2008/9||£13,000|
|Finance Assistant Post||£8,500|
|Reduction in hours of a “Strategy Officer”||£7,910|
|Councillor training on planning 2009/10||£7,500|
|Unexpected Strains on Cambridge City Council’s Budget January 2009|
|Folk festival online ticket income bad debt||£618,000|
|Loss of interest on investments in Icelandic Banks 2008/9||£342,870|
|Reduction in income from planning application fees 2009/10||£280,080|
|Reduction in income from planning application fees 2008/9||£228,730|
|Effect of loss of interest on investments in Icelandic Banks 2009/10||£208,000|
|Additional costs per year of concessionary fares scheme||£79,000|
|Cost of maternity leave||£70,000|
|Lack of Sponsorship for the 2008 Folk Festival and Fireworks||£60,000|
|Early redemption penalty and lost interest- getting out of Irish Banks 2008/9||£58,000|
|2009/10 under-recovery of costs of parking enforcement||£35,000|
|Reduction in income from events at the Corn Exchange||£20,000|
|New consultant to work on Folk Festival 2009 contracts||£20,000|
|Early redemption penalty and lost interest – getting out of Irish Banks 2009/10||£9,000|
I have included figures from two financial years, as what I am stressing is the changes which are now occurring.
In addition to the strains and cuts tabulated above, the report to councillors also identifies a number of new sources of income for the council (£182,000) as well as budget underspends and savings. Both are small compared to the challenges facing the council. Major items I have placed in the latter category are
- Procurement costs for a new swimming pool contract which is not now needed, as councillors decided to extend the current arrangement with SLM. (£70,000)
- Savings to be made as South Cambridgeshire District Council now pays the cost of concessionary fares from Milton Road Park and Ride (£30,000/year)
- Review of Car Allowances, council officer’s allowances, including allocated parking spaces for those considered to require a car for their jobs. (£30,000)
£105,000 of the new income for the council is described as : “Housing and Planning Delivery Grant Environmental Improvement Program “Saving of Capital salaries”". How can a salary ever be a capital item?
Another interesting item is the £140,000 per year starting in 2010/11 described as “under recovery of overhead costs” following the transfer of parking enforcement to the County Council.
Taking a loan
The City Council is considering that it might have to take a short term £1.1 million loan from the central government Public Works Loans Board (PWLB) in 2010/11.
This indicative of the fact this budget has not resolved the council’s financial situation and appears bizarre given the council will still have £71m in the bank. I understand that that money is all theoretically committed for various items and is not instantly accessible. I think councillors ought consider an analogy to a domestic situation, and apply a similar logic to the council’s situation.
Are the Irish banks so likely to collapse that it was worth spending £60K of Cambridge Residents money getting out of them? Perhaps they are – but where is the council getting advice along those lines from?
Finally the report reveals plans to spend £20K on a consultant to sort out the contracts for this year’s folk festival – I am shocked that the council don’t have the required skills somewhere among their 1200 staff already. If they do, why is there so much compartmentalisation preventing those in-house skills being used and apparantly resulting in inconsistent practices and a lack of efficiency and getting things right.