Leader's Budget Speech, 23rd February 2005

In moving the approval of the budget for the forthcoming financial year, Lord Mayor, I should first like to pay tribute to the work of officers in all departments who have risen to the challenge of what I think has been acknowledged by all as the most demanding financial target that this Council has ever faced.

All Departments have recognised the need for economies and have put forward constructive suggestions. Taken together we have found over £6 million in savings - more than 50% more than this Council has ever had to achieve in a single budgetary year in the past.

As I will explain later, this has been done without any draconian cut backs in services.

I would particularly like to pick out the work of Simon Wiles' team. Pete Steed and Janet Lornie have helped us through the process in a professional way and we are grateful to them and their colleagues for their efforts.

Let us take a quick look at what the future holds for local residents in York.

We have recently announced plans which represent a long-term investment in efficiency. We expect to use part of the £2 million "reward" grant that we will receive for having successfully met higher standards in key LPSA activity areas to fund efficiency investment.

By the middle of 2006, a large proportion of the Council's information and help services will be accessible electronically - some using Internet type technology. The costs of dealing with transactions of this sort are substantially less than for more traditional arrangements.

Those who need to speak with us face to face will be dealt with at a purpose designed"one stop shop". We will vacate old, inefficient and expensive leased buildings and consolidate most of our operations into a couple of City centre sites. This will result in savings in the cost of, for example, reception arrangements. It'll be 3 or 4 years before the benefits of this initiative are seen, but we feel that it is important to invest now to reap savings in the future.

Over the next year there will be a radical expansion of waste recycling arrangements in the City as we seek to reduce the costs of "landfill tax" . Improvements will also be seen in facilities for teenagers and in addressing street level anti social behaviour. It is encouraging, though, to be able to report that crime levels in the City have dropped by over 20% during the last year.

And despite the pressures that I will mention in a minute, we will continue to offer a better service to vulnerable members of our community than is achieved by most neighbouring authorities. The Social Services Directorate - which accounts for the second highest proportion of our expenditure - in particular should be recognised for the contribution that they have made to the budget process this year. No other part of the Council faces such a sustained increase in demand for services simply because of the growing numbers of elderly people in our community. Social Services have delivered big savings and yet we have a service that delivers more and better home care and some other services than most other Council's (many of whom are overspending on a major scale now).

I won't dwell on individual departmental successes for long but the achievements in Social Services are exceptional

1. In partnership with the PCT completed the conversion of the former sheltered housing scheme at Clarendon Court to provide 29 Intermediate Care beds that have already contributed over the winter period to the virtual elimination of delayed discharges from hospital.

2. Completed works at Marjorie Waite Court, another sheltered housing scheme, to provide housing with care and additional communal facilities that will be of benefit to residents and members of the local community.

3. Started work at Gale Farm Court which will add further to the provision of housing with care due to be completed by the end of this financial year.

4. Opened a new and modern Community Equipment Store to meet the needs of adults and older people who require special aids and adaptations to maintain them living independently in their own homes.

5. Improved the overall performance of Adult Services which was recognised in the Annual Performance Review of Social Services published in November.

6. Maintained the high performance and reputation of Children' Services that, together with the Education Service, has been short-listed for Beacon Status for integrated children's services.

7. Reduced the number of children looked after placed outside the city freeing up resources that can now be invested in local provision.

8. So far this year, placed a record number of children for adoption - probably making us the best performing council in the country when measured against this indicator.

So a big thank you to the staff and members associated with those achievements in Social Services. The City is proud of your success.

Of course, the budget process started off last year with a campaign aimed at getting York a fairer grant deal.

York's spend per head on services for 2004/05 is £865.61, only 80% of the Unitary average and two thirds of the highest, Hartlepool.

In additional let us remember

· York had the 10th lowest Council Tax of all 352 billing authorities in 2004/05;

· York has the 4th lowest Grant funding of all 46 Unitary Authorities in 2005/06;

· York has the lowest spend per head of any Unitary Authority (2004/05);

· York budgeted at 3.1% below FSS in 2004/05.

Our message in September to central government was clear.

The Council recognised that there was a finite pot of financial resources available for local government.

To that end, it had committed itself, both in the past and the future, to providing efficient, value for money services. In this respect we should have been regarded as well ahead of our peers.

However, efficiency savings are not a bottomless well.

York found itself squeezed between an inadequate level of funding and the requirement to continue to improve services and respond to government initiatives in areas such as children's services and waste management.

We highlighted 7 major issues that we had with the current distribution formulae.

Prominent amongst them were our concerns about the effects that the Assumed National Council Tax (ANCT) built into the distribution formulae had on York's income. It was simply illogical for central government to assume a particular level of Council Tax income for distribution purposes and then - in York's admittedly extreme case - threaten to cap actual Council Tax levels at some 20% less than the assumption. The ANCT formula which reduces the money/grant York gets from the govt, effectively requires us to put up Council Tax by about 4% just to stand still. Our small rise above this level doesn't fund the requirements placed upon us

Another concern was Area Cost Adjustment.

Put simply York's costs are viewed as being in line with rural North Yorkshire rather than the, Leeds dominated, region. This is a clear anomaly, acknowledged across political divides, but again one that has not been addressed in the latest grant allocations.

More easy to understand for many, will be the additional costs incurred by the Council as a result of the large numbers of visitors to the City.

We welcome 4 million each year.

On occasions, special events, like Royal Ascot at York, can see the population of the City double. This has implications for many services not least those connected with cleansing. We welcome the additional revenue injected by visitors into the local economy but, in the absence of a direct relationship between business rates and the councils income, we sought compensation through the grant mechanism. Again we have been disappointed.

In only one area was our campaign successful. The additional grant funding announced for all Councils for the current year will be continued - and with a modest increase - for the forthcoming year. But York will get less than elsewhere because the additional funding will again be subject to the same unfair distribution mechanism that we have criticised in the past.

I am aware that one of the local MPs is seeking to talk up the effects that this additional grant - and that applied to previous years - should have on services and Council Tax levels. This additional grant has not been built into the formulae. Around £2 million is one off money and some will think that it has more to do with getting over this years general election rather than a wish to invest long term in local services

It is true that over recent years that central government grants to local Councils have increased faster than inflation.

But that is not of course the whole story.

Next year, the additional government support grant on our expenditure of £165M is £6.162 million.

Of this £1.160 million is not new money. It simply replaces other funding streams

The key facts that residents need to bear in mind in the debate about grant levels are these:

· That some of the grant "increase" results from a transfer, into support grant, of money which was already being spent in York to pay for specific services. In that sense, it is not additional money

· The government is also transferring additional duties, responsibilities and - particularly in the case of landfill tax - financial burdens onto the Council

· &, critically, more than half of the grant is "ring-fenced" and must be passed on to local schools to balance their budgets. It is this part of the settlement that has increased at above inflation levels and is being used to fund teacher workload reforms. For example, teachers are now entitled to periods of preparation time and no longer undertake routine tasks - which have been taken over by new assistants. The Council has no option but to "passport" on this funding. This is in addition to the above FSS funding which the Council already gives to Education.

So of the £6.162 million, £3.647 is ring-fenced for Education. The total Education budget is £88.924 million

This leaves £2.515 million (3.3%) to support the remaining Council services (Social Services, transport, leisure etc) where the total budget is £76.237 million. At 3.3% this is broadly in line with inflation but fails to take into account the additional costs that are falling on the Council - cost increases on road resurfacing materials, for example, are running at 10% pa.

Put simply, central government is expecting local government to do more, for most services it is providing no real terms increase in grant and, in the case of landfill tax, it is taking back more than it is giving.

Central government have got themselves in a real mess over local government funding. They could, and should by now, have undertaken a root and branch reform of the system. But they have lamentably failed to do so.

The Council Tax system is inequitable and regressive. Small wonder that those on fixed incomes detest the tax.

This does mean that - unless there is a change of government - there is a real danger that next years revaluation of properties will result in many households in York facing a move into a higher Council Taxation band (because house prices in the area have increased more than the national average over recent years). It could be 2007 before the effects of this are felt in the Council Tax bills.

Central government could at least have reformed the formulae for distributing grant. But again they claim that consistency is the top priority.

There is little joy for York residents though in a system that is consistent but unfair.

On a positive note, we continue to offer the best deal on transport concession for elderly and disabled people of any unitary Council in the country. I hope that these do go some way to reducing the impact of taxation for those on fixed incomes. The 50p "go anywhere" bus pass, £40 worth of travel tokens or a parking pass options will be available once again with effect from April.

I am announcing today that we will be repeating our highly successful Pensioners Pride day in early April. Although the focus will be on marketing the transport concession packages, other voluntary bodies and statutory agencies will have the opportunity to participate. Last year we identified over 800 pensioners who were not claiming their benefit entitlement. We will follow up this good work again next year. These are entitled, vulnerable, poor people who we have helped to get what is rightly theirs.

It has been particularly difficult this year to balance our budget. The majority of residents, while clearly concerned about public service standards, made it clear in our earlier tax poll consultation that their top priority was to keep tax and price rises down.

We have respected that view with the Council Tax rise pegged at 5% and most car parking charges being frozen. Indeed we will see the first real terms reduction in day time car parking charges for over 10 years during the next few months.

This has, however, meant that we have had to take some difficult decisions against a background of, relatively, low government support grant allocations to the City and the fact that we are already the lowest spending authority (per resident) of any Council in the country.

We found major problems when we came to look at next years Council budget. Some were inherited. Building and road maintenance investment had been inadequate in the City for many years and this was now catching up with us. Put simply there are health and safety issues which have to be addressed.

Past decisions were also catching up with us in other areas.

Capital funding via the LTP for transport improvements, although welcome, bring an additional maintenance liability for street lighting, bus shelters, pedestrian crossings, road markings and traffic signals. These are inescapable.

In addition we need to improve the quality of the winter maintenance service - that means more footpaths being sanded in icy weather.

We must find £1/3 million to pay for the PFI schemes at our schools.

More out of authority placements for children with behaviour or other problems will add over £1/4 million to the budget.

There are risks, and some likely disappointments, in this budget.

· We have not yet been able to identify additional funding to help the Museums Trust with their ambitious plans to regenerate the Castle Museum.

· We would like to do more for the library service than will be possible this year although we are now looking at a PFI scheme which could transform the service in the City.

· Similarly, although funding for the voluntary sector is being maintained, new demands for funding are arising which may be difficult to satisfy.

· Care home owners are seeking an above inflation rise in their fees.

· We must also make up the deficit on income which resulted from the reduction in car parking charges in the autumn. Use of car parks has been increasing recently, but traditionally this income head is volatile.

· We have problems in the pipeline - with job evaluation and equal pay issues likely to impact on our expenditure heads.

· Our capital programme funding will be under pressure in a couple of years time as we begin to run out of disposable assets

Our prudent use of the contingency budget this year gives us belief that we can contain cost pressure during the next 12 months.

One other risk relates to the pension fund which is in deficit. We depend on a significant stock market recovery if we are to avoid increased employer contributions in the future. We have already seen the protests from Council staff about Labours plans to change the retirement age to 65 and to restrict early retirement. The government failed for 8 years to address the issue and have now panicked. Huge pension fund deficits mean more pressure on Council Tax payers in the future. This will hit low paid Council workers and pensioners the hardest.

Could we reduce our balances even further? The professional advice is that we shouldn't. I would direct members attention to para 84 on page 425 and para 115 on page 434 of the reports to this meeting. There are too many uncertainties to take unnecessary risks as we embark on a major renewal programme within the Council.

It is prudent to plan ahead and ensure that we have flexibility in our balances to deal with any further unexpected pressures on the budget from 2006 onwards. It would be highly short-sighted and irresponsible to raid balances this year simply to face an even higher Council Tax increase in 12 months time.

York must continue to pay its way on an annual basis. It would be very imprudent to drift into uncontrolled levels of risk and debt.

As I have explained central government has been delegating more and more responsibilities to local authorities. These have to be paid for.

Next year:

· We have new responsibilities to maintain Public Rights of Way.

· We must inspect a larger number of houses that are in multiple occupation,

· We have to pay more to foster carers

· We have to make buildings accessible to those with disabilities

· We must invest more in repairing the river banks to prevent flooding and other risks plus

· There will be a bill arriving for over £100,000 for removing asbestos from our buildings

Additionally, central government has been putting more and more restrictions on local Councils. One example is the huge increase in tax on the volumes of waste that are generated and currently tipped (at Harewood Whin, in the case of York). It will cost us around £1.3 million next year to "compost" more waste and hence avoid part of this punitive tax. Yet we will still have to find an additional £1/4 million in landfill tax payments next year.

It wouldn't be so bad if central government helped to pay for the costs of the separate collection of recyclables - but we get back much less than we pay in tax to them.

Another example is the education passport which includes £600k to fund teacher workload reforms in each of the next 2 years.

There have also been demographic changes. People are living longer but, towards the end of their lives, they are experiencing ill health for longer periods. This has put increasing pressure on Social Services budgets.

· We will have to find over £1/3 million extra next year to support people with complex care needs.

· £100,000 extra is needed to cater for the increased numbers of elderly people needing support in their homes.

A new generation of problems have arrived.

15 years ago people wanting to dispose of a car would have sold it to a scrap yard. Now some owners seek to dump their worthless vehicles on public land. Another charge on local taxpayers as is the requirement, for environmental reasons, to dismantle some electrical appliances such as fridges

Taken together, these issues added up to a potential £17.4 million pound budget deficit for the Council.

Over the last few months we have tackled the issue vigorously and have reduced the gap to around £2.7 million. It is that which will be funded by the 5% tax increase.

Could we have cut more? In theory we could close most, perhaps all, of the libraries, youth clubs and swimming pools… but much of our expenditure is statutory - we have no option but to educate the children, care for the elderly, maintain the footpaths in a safe condition and empty the bins (or remove the sacks!).

The majority of members here today were elected to the Council on a manifesto of reform. We want to see public service standards improved.

We find that the main impediment to making progress lies beyond York's boundaries and out with the Councils control.

I am pleased to report that independent assessors have rated York as providing "good" quality Council services and indeed we are now only a whisker away from an "excellent" rating.

Over the next year we will continue to spend more than previous Councils on repairing our roads, footpaths and buildings

York Pride quality standards will be extended to other service areas. There will be a major boost for winter maintenance funding with greater lengths of footpaths being de-iced than at any time in the past.

Can I thank those residents who have supported our York Pride campaign? The City is looking better now as we get to grips with litter, dumping and graffiti. The investment made in the street environment has produced a dividend, as has the initiative which I announced at the last budget meeting to tackle improvements on privately owned, publicly accessible, land.

Our partner campaigns - York Business Price and York Community Pride - have also been hugely successful mainly as a result of voluntary effort.

York Business Pride has now raised over £200,000 for investment in the fabric of our City. The benefits are evident in several places including the Memorial Gardens. To consolidate on the work done there we plan to restore the railings around the gardens next year to provide better night time security. I believe that Business Pride will be announcing shortly their next initiative which will concentrate on restoring another well known York landmark.

But perhaps the greatest progress over the last 12 months has been made with York Community Pride. Several dozen local groups have taken advantage of the seed corn funding that we made available this year to provide equipment and materials for residents that wanted to invest time and effort in their local community. This was a success as was the complementary awards scheme - recognising "local heroes" - which was run with the Yorkshire Evening Press and which we hope to repeat again later this year.

I hope that residents will keep on reporting service quality issues to the York Pride Action Line (York 551551). We will do our best to provide a quick response.

Lord Mayor, with the eyes of the world upon us, as we prepare to welcome tens of thousands of visitors to events such as Royal Ascot at York, I believe that we have reason to be increasingly proud of our City.

1. The City is cleaner, greener and safer than it was 12 months ago - much of this progress has been as a result of the York Pride/Safe City initiatives

2. Working with the Police we have achieved a 20% reduction in crime in the City over the last year

3. Our York Pride programme has been recognised, by Councils in other parts of the country and by government departments, as a paradigm for local quality initiatives - involving both the business and local communities in funding and improving the local living environment

4. Our employment levels are amongst the highest in the country

5. We are just completing the largest ever annual programme of road and footpath repairs in the City and will still be investing more in maintenance next year than our predecessors ever managed.

6. We are modernising more homes than happened 2 years ago and to higher standards of security

7. Our teenagers holiday leisure programmes attract over 25,000 participants.

8. We are tackling social exclusion - our pensioners pride day provided the springboard for 800 more to claim tax and housing benefits.

9. Our partnership working with Health has seen us tackle delayed discharges at the local hospital

10. We have one of the best Education systems in the region based on OFSTED inspections, results and customer satisfaction measures. Last years exam results in particular were outstanding. We hope that the paradigm early years service will achieve national recognition shortly.

11. We have a good and improving Social Service department which now deals with more customers than ever before and provides support more quickly and to easier standards of accessibility than happens in neighbouring authorities.

But we will do even more. Over the next year we will:

1. See the arrival of the new FTR Bus/Tram which could transform the comfort levels of public transport expected in the City and indeed in the region.

2. 4 new schools, with new facilities, newly equipped, available for the community, with a new library, a new Sure Start centre and other facilities - all at almost no/very little cost to the local tax payer. The first new build for 2 decades. Plus at least one of the secondary schools will be substantially modernised.

3. Dramatically improve recycling facilities in the City. We are already recycling at a rate exceeding central government targets following the step improvement driven through by the present Council. We'll do even better, first by introducing a separate collection of garden waste for composing and then by modernising the household waste sites.

4. Make a start on modernising our sports halls, concert venues and swimming pools, neglected for years & invest £50,000 more in leisure provision for teenagers addressing the top concern expressed by residents in the ResOp opinion poll and confirming the conclusions of the Councils own scrutiny panel.

5. invest an additional £25,000 in Safe City initiatives

6. Help to fund a new City Centre partnership which will stimulate economic activity at the heart of our community

7. We will complete the modernisation of all our elderly persons homes and will replace the aging and outdated Hebden Rise centre, for those with disabilities, with a new facility.

8. Work will start on the new Eco Depot - a model of sustainable design which will set new standards for the region and which has very recently attracted an increased grant from Yorkshire Forward.

But our frustration is that we could do so much more with central government support (or even benign neglect)

I met with Nick Raynsford in early December. He is far from being the worst of the current crop of Ministers. But like the rest of the present government, he is obsessed by the need to be "appearing to be doing something". Hence Council Tax capping. Not a process that is sensitive to local circumstances - nor even respectful of the principle of local accountability or the independence of local government.

Central government has been aware for some time of the unfairness of the present funding system. Let me remind everyone:

· York has the lowest CT level outside of the SE of England.

· We spend less than FSS - the amount that central government believes we should invest in local services

· Our Council Tax income is 20% less than the assumed income from Council Tax included in the governments own ANCT calculations

Yet York still faced capping

The new government, which will be elected later this year. must have the courage to set local communities, and their Councils, free from central regulation and interference.

York is set to have an even more efficient Council. In comparative terms we already are one of the two most efficient unitary Councils in the Country.

Yet we will pledge to meet and exceed the new Gershon efficiency saving targets.

This will be achieved by having a Council which is

· easily accessible by electronic means - that will cut our costs &

· housed in buildings which are purpose designed to meet the needs of the customer - the York resident.

This is a budget that we are happy to take responsibility for. There are no short term expedients.

The budget is robust and looks to the future

The City of York is always at its most effective when residents work together to overcome issues. This we have done very effectively with our partners over the last 2 years.

Together we will provide more tangible success in the future.

Lord Mayor, today we are proud of our City.

Tomorrow it will be even better.