Mid Devon faces £1million shortfall

Readers might need to refresh their memory on the backstory: A cautionary tale from Mid Devon Council dabbling in development.

Control shifted in Mid Devon Council from Lib Dem to “no overall” control in 1999 and is run by a coalition of Lib Dems, Independents and Greens. 

The underlying problem is that central government in England controls the purse strings of local government to a much greater extent than other wealthy countries. This Westminister “control freakery” is one of the reasons regional devolution is not progressing and why “levelling up” is likely to prove challenging. – Owl

Lewis Clarke www.devonlive.com

Mid Devon is looking at any available opportunity to make ends meet with predictions of a £1million shortfall.

Speaking at a scrutiny committee meeting of Mid Devon District Council on Monday, October 11, cabinet member for finance, Councillor Andrew Moore (Clare & Shuttern, Conservative) said that ‘circumstances have continued to be far from normal.

He said: “The wheels of finance, as we know, must roll inexorably on.

“The last six months have seen the team complete the annual closedown with the draft statement of accounts again being produced very promptly.

“The audit is well advanced, and early indications are for another sound report.

“Covid continues to affect financial performance, but I’m pleased to say, is in line with budget expectations. I want to note as well, not for the first time, the terrific grant-related work undertaken by the team, not just in the last six months, but beyond to support our local communities and businesses.

“Looking forward, we’re on the point of starting the annual budget round for 22/23. All members have a vital say in the council’s plans. Now is the time to bring forward alternative options for proper consideration.

“The starting position has improved from earlier indications, but it’s still around a £1million shortfall. “Central funding uncertainties abound, and service revenues remain at risk. As ever, costs are under pressure for reductions to make ends meet.

“Whilst we all like them, new initiatives rightly need solid financial justification.

“There is a lot of work to do between now and the council meeting where we address the budget on February 23, 2022.”

Deputy chief executive Andrew Jarratt added: “The challenge will be that the government are going to provide quite late advice from some of the key financial revenue streams that we’re going to require for next financial year.

“Budget setting is going to be a challenge set against that backdrop.

“We have been told that we’re likely to receive a three year settlement, which in some respects is very welcome, but we must be careful what we wish for because the last time we’ve received a three year settlement, the numbers were quite scary.”

Councillors heard some of the broad plans and ways the authority was attempting to reduce the shortfall.

Mr Jarratt added: “it’s not all going to be about cost reduction. There’s going to be a mixture of cost reduction and income maximisation wherever possible.

“The prevailing economic situation does not help us at all in the rounds of income maximisation. Some of the commercial opportunities we have been exploring over the last two or three years will be met against a very strong prevailing negative wind. Things like investment in industrial units or other commercial activities may not be quite as successful as we’d hoped.

“At the moment, we’re trialling different ways of delivering our waste service, which could save significant amounts of money, but also is important to meet the national targets for recycling rates, which are particularly challenging to meet.

“We will work on an ongoing building rationalisation program to reduce cost and increase rental from income where possible. We brought the DWP to Phoenix House about three years ago, and we maintain a healthy annual rental stream on that basis.

“I’m pleased to see that all of the units at Market Walk are rented out. There aren’t many councils with a unit portfolio as active as ours.”

He said at Mid Devon’s leisure centres before Covid, income was £3million.

“I was chatting to the management team of leisure about some interesting ideas they’ve got for making that income stream even healthier over the next six to twelve months,” he said.

Mr Jarratt then discussed the council’s green agenda.

“Set against that backdrop, the council has made a pledge which may reduce costs moving forward, but at the moment will probably increase our cost pressure. That is the carbon green agenda and ensuring that we become carbon neutral by 2030.

“That will need some pump-priming expenditure, but we may well see a significant reduction in utility spend over the next two to ten years.

Councillor Stephen Pugh (Westexe, Conservative) questioned empty properties and voids.

Mr Jarratt discussed the council’s 24 commercial property units it owns.

He said: “We budget for a level of voids on a rolling regular basis. It depends what the market situation is at any given time.”

He said the council had anticipated at least one void at Market Walk.

“It depends which one,” he added. “The one that’s been most noticeable to members of the Tiverton area has been the biggest unit there, which is Unit 17, which was once the medium-sized superstore.

“Unfortunately, we’ve had a void there for 18 months, but I’m very pleased to say we’ve recently signed a new rental deal with somebody to go in there for a short term with the NHS vaccine program utilising it.”

Empty shops in Tiverton at Market Walk

Empty shops in Tiverton at Market Walk

He added that Market Walk was ‘doing well.

“I hope the investment that we made about 12 months ago to improve the streetscape up there is paying some dividends.

“It’s all about increasing footfall, not just for our properties in the Tiverton Town Centre but for all the other retailers as well.”

Councillor Ben Holdman (Castle, Liberal Democrats) talked about car parking.

“I have noticed in the last year we have had problems with some of the machines,” he said.

“That will affect revenue streams on that one and also drive up complaints.

“Is there an action plan to keep our machines as up to date and maintained as possible?”

“I wouldn’t be very happy that we were losing any revenue opportunities,” he said.

“Occasionally, they do go down, but we fix them as soon as we possibly can.

“The issue of Covid is why our car parking income is down. People aren’t visiting the town centres as much as they once were.

“Most of our large fee-earning car parks have more than one machine in them, so there is always somewhere to pay.

“It’s amazing now how much more traffic is done electronically rather than through the machines.”

Councillor Ray Radford (Halberton, Conservative) suggested that HGV driver shortages, and people off sick or isolating, meant the council could be spending more on agency staff.

Chief executive Stephen Walford explained they currently face a shortfall of around nine per cent.

“One of the big challenges we’ve got, as with any organisation at the moment, is to balance off all of the inflows and outgoings with the labour shortages that we’ve got,” he said.

“It is a challenge, and it’s often that we can’t go out and get agency staff.

“Whilst there is a cost to that, there is also a limit to the ability to which we can go out and acquire short term labour resources. Then we have to look at the impact on service delivery.

“Across all the council’s budgets, the incomings and outgoings all look a bit different this year, and that is true, nowhere more so than the staffing line.

“We’ve got structural vacancies, but we’re not saving money because we’re expending extra resources on trying to bring in short term people, which tend to be more expensive. We are also coming up against that point where they might not simply be there to hire in.”

Mr Jarratt added: “The nation has a problem with HGV drivers, and it’s not going to go away very quickly.

“Agencies are more expensive than our people in the short term, and we are overspending in that part of the business. However, within the area of waste, we’re over-achieving on income from recycling due to increased tonnages and the quite good recycling rate we’re getting at the moment, so that’s more than compensating.”

He said the council was now trying to ‘grow our own.

“At the moment, we’ve got seven or eight of our refuse loaders who are being trained to be drivers. It will be a prevailing problem for maybe a couple of years, but we’re doing what we can.

“Of all the services that we deliver, waste is the one where a resident rightly expects to have their bins collected on the day that they want them to be collected.

“I’m sure members collectively get it in the ear when we miss a collection, and so do we as officers. “It’s a service that we’re proud of, and we get a lot of great customer feedback.”

Councillor Sue Griggs (Cranmore, Conservative) asked about the council’s housing strategy consultation and future plans.

“The strategy put forward a very bold vision with plans to build new properties for tenants. It also aims to adapt the homes that we already have to retrofit, improve the environmental efficiency of homes, decarbonise, reduce fuel poverty, and meet climate targets.

“I wonder whether or not we are going to be able to achieve that, bearing in mind the budget constraints that we have.”

Mr Jarratt said: “At the end of October, at the next cabinet meeting, the council’s medium-term financial plan will be discussed and the council’s overarching financial document that will try and cast out the council’s ambitions over the next five years.

“Within that, there will be a lot of work done on the housing strategy that is now out for consultation.

“It’s an aspirational plan for housing delivery because it’s something as a council we haven’t done much of for a reasonable number of years now.

“If you add on top of that our carbon agenda, it adds an extra challenge.

“Another major challenge for our council housing stock is the post-Grenfell legislation coming down the line. It is going to put more financial strain on our assets.

“We will be costing all of those ambitions. Whether all of those ambitions are financially deliverable is a moot point; they probably won’t be. It will be a question of prioritising.”

“The interest income from Three Rivers is described as profit to the council, but that’s not the case until they’ve paid back the capital,” he said. “What likelihood is any of that capital being paid back this year or next year?”

Mr Jarratt said: “The next cabinet will receive the bi-monthly update from Three Rivers, and the meeting in November will have the half-yearly performance information.

“What you will also get is the company’s updated business plan, which therefore will link very heavily into the council funding future over the next five years.

“All of that information will be in the public domain.”

Councillor Elizabeth Lloyd (Sandford and Creedy, Green Party) suggested involving communities in the decision-making processes.

“It is great that members are being asked to input to this budgeting process, and I look forward to doing so, particularly on our work around the climate agenda, which we all agree is important,” she said.

“Last year, I suggested we look into things like participatory budgeting to engage our communities in this process.

“I’m curious whether any thought has been given for such a process. It can be a chance for our communities and the public to give their input.”

She offered help to arrange a public meeting to talk about ideas and find ‘innovative ways of thinking and solutions together.

Cllr Moore said: “I’m always astonished by how much there is to learn about the financial system and the nuances. That’s, of course, why we have people like Mr Jarrett and his team to help us.

“I’m always learning. This is a big and complicated area with many assets to it.

“I would encourage members to represent communities, and it’s up to you to make sure that you have a voice.

“Please use it, and please use it early if you’ve got ideas. We don’t want somebody in February with things we didn’t think about when it’s too late. Early engagement is what I am keen to do.”

Mr Jarratt added: “if there’s anything we can do to get our message out to the community better than we’re doing, that would be great.

“In the next four weeks, we’re sending out a resident’s consultation survey. We will explore within that all of the ideas that our public think we should be exploring.

“This will have to be matched against the available resources that we have.

“The sooner that we get these ideas, we can go away and model them and see how we can fit them in with the budgetary envelope that we have.”

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