Public Spending Cuts

East Lothian Council’s Administration has begun a major review of budget options in response to expected cuts in funding from central government for local authorities over the next few years.

Although details of East Lothian Council’s funding allocation for 2010/11 will not be announced until late this year, our Finance colleagues are predicting that the cut in income to the council could be as much as £4.6 million (our department accounts for nearly 50% of the Council’s total budget).

In a report presented by our Council’s Head of Finance, David Spilsbury, earlier this week, councillors were advised that as well as planning for funding cuts, they would also need to allow for increased demands for spending on services such as those for older people and children, homelessness and waste. 

Education is also likely to place further demands on the Council’s finances.  While school rolls have been relatively static over the past three years, they are expected to rise in East Lothian by over 5 per cent in the next two.

Even without pay awards, staffing costs – which currently account for almost half of the Council’s cost base – will also continue to grow.  For example, the cost of making good pension deficits will increase from £1.3 million to £2.2 million each year from 2011.  Salary progression for some employees is also expected to add a further £1.5 million to the bill in 2010/11. 

There seem to be four alternatives when facing up to such challenges as a manager:

1. Allow yourself to be consumed by the enormity of the task and suffer from a form of “manager’s paralysis”; or

2. Denial – tell everyone it’s going to be OK and hope it won’t happen; or

3. Panic and grab at any alternatives which appear at first glance to generate savings but fundamentally undermine the service to it’s long-term detriment; or

4. Maintain a calm, rational and positive focus upon what it is we are trying to achieve – in our case educate and support children and young people – and collectively look for imaginative and sensitive solutions which change the way we do things.

As far as I’m concerned the only viable option is the number 4 – with the focus being on collective action where all parties have access to the facts. 

As Dave Berry, the Council leader put it:

 ‘In my opinion, there will be no ‘silver bullet’ that will solve these problems at one stroke. But what this Administration intends to strive for is a judicious combination of efficiency savings, income generation, shared services, co-operation with partners, especially in the Third Sector and the kind of effective overhaul of services that has resulted in Adult Social Care moving from habitual annual deficits to releasing three quarters of a million pounds to allow for the provision of further services.’ 

I will be returning to this theme on a regular basis over the coming year.