John5-jan-2015 (2)John Ferrett, Leader of the Portsmouth Labour Group of Councillors, writes about recent issues from Portsmouth City Council:

City Council budget cuts

In December 2015 the City Council set the budget limits for each portfolio of the council. This required savings of £11 million to be identified because of continuing cuts to the revenue grant by central government. A further £5.6 million of savings were passed by the council’s Tory cabinet, because of overspends this year in the adult social care and children’s services portfolios. As a resume some of the more controversial cuts included:

  • Cutting the grant for domestic violence services
  • Ending funding for the hate crime unit
  • Cutting a third of the overall sexual health budget
  • Further cuts to Sure Start reducing the number of centres to six, from 15 in 2013.
  • Big cuts to the budget for supported living for residents with learning disabilities

Given that councils are unable to run a deficit and must, by law, set a balanced budget, the Labour Group’s amendment had to reflect this. Therefore, we proposed a cut to councillor allowances and the number of cabinet members in order to raise £120,000 for Sure Start. This amendment was defeated by the Tories and Lib Dems, although did receive the support of UKIP councillors.

In terms of the Council’s proposal and the Liberal Democrats amendment, the Labour Group decided to abstain on both. Our view was that whilst we disagree with the scale of cuts effectively imposed by central government we did not believe councillors should act outside the law. Furthermore, with no overall control on the council our votes could potentially leave the council without a budget and subject of punitive action by central government.

Upcoming decisions

At the next full council meeting decisions will be taken on the city’s capital budget for 2016/17 and the level of council tax. There will also another opportunity to amend the savings proposals put forward in December.

The capital budget is likely to be focused on schools. The city has an ongoing shortage of primary school places and this is now feeding through to secondary schools. There is also likely to be a proposal to double the size of the city’s property investment fund from £30 million to £60 million by the use of prudential borrowing. Put simply this enables the council to borrow at relatively low rates of interest and earn a greater rate of income from the property portfolio. The Labour Group broadly supports this strategy as it is essential that new forms of income are found given the exponential reduction in the revenue grant from central government.

In terms of the council tax for the past four years the Labour Group has proposed an increase every year. This would have given the council an extra £5 million of revenue and substantially mitigated the cuts. The Tories and Lib Dems consistently voted against us on this and even used it to attack us at election time. However, the Tories have now ‘seen the light’ on the dangers of reducing the tax base and are likely to advocate for a 2% increase in the council tax this year. Additionally councils with social care responsibilities, such as Portsmouth, have been granted the right by central government to raise council tax by a further 2%, on the condition that it is spent on social care. Unfortunately, this sum will not even cover the additional expenditure in social care that will result from the introduction of the national living wage (NLW). Indeed, because Portsmouth has a largely low-tax property mix the 2% social care precept will still leave the city £700,000 in deficit following the introduction of the NLW.

The Labour Group is minded to support the 4% increase in council tax. This is consistent with our argument over the past few years that the council tax base should not be eroded at the expense of services. However, we are under no illusions about the difficulties some residents will face in paying the increase and the potential unpopularity of this measure.

Combined Authorities

There has been much talk in PCC over the past few months about the possibility of creating a combined authority, similar to models being adopted elsewhere in England. The most notable example is Greater Manchester where 11 unitary authorities have agreed to come together under a single elected mayor. In return the government are granting the combined authority powers over house-building targets and planning, transport infrastructure and health spending. The overriding aim is to encourage economic growth, but a by-product will be to shift responsibility from central government to local government for spending decisions, not least on the NHS.

The preferred option for the PCC administration, and shared by the Labour Group and our colleagues in Southampton, would be for what has been termed a Solent Combined Authority. This would consist of Portsmouth, Fareham, Eastleigh and Southampton. However, this is not favoured by the government who would like to see a larger entity created, consisting of Hampshire County Council, including numerous district councils, and the unitary authorities of Portsmouth, Southampton and the Isle of Wight. Therefore, the latter combination have been attempting to shape a proposal that is acceptable to the government and would enable a transfer of powers.

Despite many months of talks the councils that would make up a Hampshire and IOW combined authority have been unable to agree on a model of governance in the absence of an elected mayor. Indeed, only Labour controlled Southampton have come out unequivocally for an elected mayor. As a consequence the government are not prepared to transfer any powers to the region. If this was to continue this could have some grave implications for future growth in the area, given that access to increased infrastructure funding is tied into the creation of combined authorities.

Finally, I have been asked about the pluses and minuses of an elected mayor.

Clearly, an elected mayor would take certain executive powers away from local authorities, but would also be in a position to make the difficult decisions that might otherwise be vetoed by one of the many players in a wider Hampshire and IOW combined authority. Conversely, it could be argued that creating an elected mayor with wide-ranging executive powers would centralise power and further damage local democracy.