Minutes:
The Chair welcomed the Leader of the Council, the interim Chief Executive and the Director of Finance to the meeting. Prior to the consideration of questions from Members of the Committee, the interim Chief Executive outlined the overall funding position and underlined the severe pressures on the Council’s finances, as follows:
- Revenue Support Grant (RSG) – the Council had seen its RSG reduced by 97% over a 7 year period. By 2019/20, the grant reduction would equate to £1.566m. This had translated into funding gaps of £22.8m over the next two years. The Council had been addressing funding gaps since 2006 and had been underspending, in comparison with other local authorities. The Council had made transformational changes such as in its library and garden waste collection services. Growth pressures in Children and Adult Services would continue, including in the delivery of Special Educational Needs (SEN). The Council was finding it challenging to identify savings year on year;
- Business Rates – in Harrow had been in long term decline. Pooling arrangements would be addressed during the latter part of the question and answer session;
- Reserves – the Council did not have large cash reserves and its general fund balances stood at £10m. As a result, it had limited ability to ‘smooth out’ funding gaps or invest over a number of years and this situation would continue.
The interim Chief Executive added that the Council had been in discussion with the Local Government Association (LGA) to seek advice. The Council had delivered an underspend in 2018/19 and the draft budget contained ‘cushioning’. The Council had started work on demographic shift and trends in Harrow to help prepare future budgets. In Children’s Services, savings had been achieved due to actions implemented in 2018, such as early intervention. In Adult Services, changes were at an early stage and teams were being re-organised. Officers were also exploring joining health and social care with housing. Significant savings had been made in the Community Directorate and work on Project Phoenix was continuing. In the Resources Directorate, Human Resources (HR), Finance and Payroll were all operating at minimum levels.
Members asked a series of questions to the Leader, Chief Executive and the Director of Finance and received responses as follows:
What was the future direction of the Council – the big picture – referenced in paragraphs 1.61 and 1.62 of the Draft Revenue Budget report submitted to 6 December 2018 Cabinet meeting?
The Leader of the Council and the interim Chief Executive responded as follows:
- the vision was to deliver on an effective adult social care service, reverse ‘growthout’ and tackle demand. Amongst its other initiatives, the Council was looking to integrate health and social care but it recognised that the Clinical Commissioning Group (CCG) was also facing financial difficulties. The report to December 2018 Cabinet meeting alluded on the need to focus on the Council’s future financial position to ensure that Council services could operate safely, within the law, could be afforded and were delivered as cheaply as possible whilst being effective;
- the Council needed to strike a balance between permanent and agency staffing levels;
- the Council was looking at commercial opportunities. The Council had to look at what financial contribution it could get from the Regeneration Programme in order to help fund future gaps in the budget;
- national changes would also impact on the Council. The forthcoming Comprehensive Spending Review was not expected to address Harrow’s financial position specifically. The NHS 10-year Plan would be both an opportunity and a challenge to local authorities as the intention was to provide services in the community. Additionally, early discharge of patients from hospitals impacted on the CCG and the Council. The Social Care Green Paper was awaited;
- the Council was one of the most economical boroughs in service provision. The Council needed to ensure how best to spend the money available and that the services provided were viable. It needed to decide whether it should provide statutory services only, how best to recover costs and expand its commercialisation programme. Early intervention was essential as it would help provide long term benefits to the Council;
- the Council could not rely on one-off payments from the government as it made it difficult to plan for the future and recruit staff. Insufficient funding would put the Council in difficulty. The Council had supported the ‘Breaking Point’ campaign to end austerity in local government. However, the RSG was expected to be reduced further at a time when the costs associated with Adult Services were likely to rise drastically.
The Leader of the Council stated that the outlook was bleak, many Council budgets were at ‘breaking point’ and that austerity had gone too far. The challenge for officers in delivering services whilst finding savings had increased, particularly in areas such as Adult Social Care where increased demands were being funded by Council Tax payers in the form of the adult social care precept.
What assumptions had been made about the income that would be received as a result of the Council’s Regeneration Programme and Project Infinity?
The Leader of the Council stated that Brexit had slowed down the building market and this had impacted on Harrow. The Council’s Regeneration Programme would continue but a cautious approach would need to be taken to ensure that value was delivered over time and risks factored in. The Leader outlined the implications of increased costs in the building industry. He had no figure in mind for what financial return could be expected from the Regeneration Programme.
With reference to paragraphs 1.42 and 1.43 in the Draft Revenue Budget report submitted to 6 December 2018 Cabinet meeting, what was the logic behind the transfer of fixed capital receipts on the revenue costs of reform projects? What were the associated costs and benefits and had any income projections been made?
The Director of Finance explained the budget assumption supporting the £500k adjustment for Gayton Road in the revenue budget report at, Table 1 of the report submitted to December 2018 Cabinet referred. A revenue benefit of £500k had been included for two years. If the decision was that these properties were purchased by the HRA (Housing Revenue Account), the revenue benefit would be replaced by a capital receipt. She added that, to date, no decision had been made to transfer propertiesto the HRA. In terms of the use of the capital receipt, the decision would be taken at the point of transfer.
In response to further questions on whether the receipts were guaranteed, the Director of Finance replied that that would be the case and it would benefit the Council. With regard to a question on the timing in relation to the £32m grant money from the Greater London Authority allocated to Harrow, the Director of Finance stated that she would confirm the timings and inform the Committee. She added that there would be an impact on the HRA Business Plan which would be quantified at a later stage.
What was the Council doing about the homeless and the Homelessness Reduction Act? How was the Council tackling the issue in terms of its strategy and available funds?
The Leader of the Council stated that the Council was supportive of the Act but was of the view that not enough funding had been built-into the measures for reducing homelessness although not all last year’s funding had been spent. In relation to the London boroughs, the impact of homelessness was more acute for outer London boroughs where there was insufficient affordable housing. The drivers behind homelessness were the increase in housing costs and Universal Credit. There was a moving debate on this issue and it was important to understand the key drivers of homelessness which included the lack of stability in the housing rental market.
The interim Chief Executive stated that Harrow was experiencing an increase in those living in Bed and Breakfast (B&B) following the introduction of the Homelessness Reduction Act. There were 180 households now living in B&B compared to just over 100 at the beginning of 2018. Overall, there were 900 households living in temporary accommodation. The figures were high and advice and support was being provided to the homeless. An initial analysis had been carried out in relation to the issue. The figures were high and advice and support was being provided to the homeless. An initial analysis had been carried out in relation to the issue.
With regard to homelessness, what was the role of the Voluntary Sector, including the strengths and weaknesses on how the situation could be improved?
The Leader of the Council reported that a number of advisory services had been consolidated and were run through the Citizens’ Advice Bureau (CAB) which was partially funded by the Council through the HRA. There was also a hardship budget of £100k available to provide support.
The interim Chief Executive stated that, in practical terms, a great deal of work had been undertaken to prevent homelessness and the Council would like to do more to help but, currently, it was considered that the service provided was effective. Discussions were continuing on the role and responsibilities of the Department for Work and Pensions (DWP).
The Leader of the Council stated that the CAB was also struggling with the number of homeless cases it continued to receive and whilst there were other organisations providing advice, this had not been advertised.
What was the Council doing about Adult Service provision as the demands in this area were expected to rise? What measures was the Council taking to deal with the increase in costs whilst its funding was being reduced?
In response, the Leader of the Council stated that going bankrupt was not an option for Harrow Council and he referred to the issues facing Northamptonshire County Council. With the levels in funding gaps, there was limited scope available to the Council to take action. He referred to paragraph 1.61 of the Draft Revenue Budget report submitted to 6 December 2018 Cabinet meeting, which outlined the actions that the Council would need to take in order to focus on its future financial position. He stressed that unless the government provided additional financial resources to address the issue, the Council would have no option other than to close down some of its services. Otherwise the government would step in and do the same.
In response to further questions on the issue of Adult Social Care, the Leader of the Council stated that budget savings for 2019/20 would be delivered but this would be dependent on demand. The Council may need to draw on its reserves but this would ‘fuel’ the situation for future years. Looking ahead, the challenges facing the Council included:
- the Fair Funding Review which would set the new needs baseline in April 2020 and would determine the distribution of core central government funding to local government.
- cost pressures and getting the message across to the government.
In response to a question on what actions the Council had taken regarding Fairer Funding, the interim Chief Executive stated that London Councils was leading on the campaign on behalf of London boroughs. Harrow Council was pushing London Councils on how it would protect the position facing outer London boroughs. Similar discussions had taken place with the Local Government Association (LGA) on the historic low levels of funding provided to outer London boroughs.
Was the Council going to meet its target of providing 500 new homes?
The Leader of the Council stated that he was expecting 500 new homes to be built over the next 2 years but felt that the Right to Buy hindered the process.
A Member of the Committee asked if the Leader would support the argument put forward by a Labour MP who supported the Right to Buy Scheme provided the capital receipt was used to invest in another property. The Leader explained his reservations. Another Member of the Committee asked about the need to explain to residents on why the Council was struggling to build Council homes.
What would the impact of a ‘No Deal’ Brexit on Harrow?
The Leader and the interim Chief Executive stated that a co-ordinated approach was being taken through London Councils but what was lacking was national planning assumptions around what Brexit might mean. In Harrow, there would be an impact on the available workforce, particularly for Harrow Council and local hospitals. Harrow also had some 50,000 European Union (EU) residents living in the borough. Additionally, the issue of medication, with diabetes prevalent in Harrow, was high on the national agenda and it had been noted that the National Health Service (NHS) had made some statements on this issue. The impact of Brexit on Harrow was at the forefront of the many other issues facing the Council.
How was the issue of ‘Modern Slavery’ being addressed by the Council since the Motion to Council? Had a Communications Strategy been developed to alert residents to Modern Slavery?
The Leader of the Council stated that this issue had been included in any contract notification. Other avenues would be considered to highlight the issue.
How would the budget impact on the Library Service in Harrow? What concerns did Members have about residents having to rely on online communications only, such as those proposed in the Planning area and the Public Realm? Would residents be able to make contact with the Council by telephone?
The Leader of the Council informed Members that the Council was running out of options on identifying savings. He added that 90% of residents contacted the Council online. In relation to Planning, the website was being redesigned and online communication would lead to better record keeping. Both projects would come to fruition within the next 2 years. With regard to bin collections, the number of telephone calls to the Call Centre had reduced.
The Leader added that the Council was also looking to ensure that minority groups were able to access Council services smoothly.
Since the collapse of Carillion, the Council had managed its own libraries. The Council wanted to keep all its libraries open and, following an analysis of their use, the matter was being consulted on. A decision would be taken after the consultation period had expired. The Council was also exploring renting out facilities it owned, such as the Harrow Arts Centre and other similar venues to bring in additional income.
How was the Council addressing the problem of crime, particularly violent crime in Harrow? What discussions had taken place at the London Council’s Leaders’ Committee? What had been the impact on Harrow following recent changes to the structure of the Metropolitan Police Service (MPS)?
The Leader of the Council stated that at the Leaders’ Committee, Cressida Dick, Commissioner of London’s Metropolitan Police force, had announced that the MPS would need to make savings of £350m.
The move to Police Commanders having responsibilities across three boroughs had given Harrow better resilience and experience. It also had an adverse impact in that Harrow police officers were taken out of the borough to assist with violent crime in neighbouring boroughs, such as Brent.
The Leader added that the reduction in the numbers of police officers had not helped and funding was a long term issue. Harrow had used a ‘Needs Analysis’ approach to target areas suffering from high levels of crime and gang culture such as in Wealdstone and Edgware. He was also concerned about the ferocity of crime. A new Crime Unit and the Youth Offending Team (YOT) had helped provide support in challenging areas.
The interim Chief Executive agreed that the changes had brought about greater resilience and recent episodes in Harrow had confirmed this. The Council would keep an eye on the issue of response times which were higher for Harrow due to police officers responding to crime in Harrow from their main base in Brent.
However, the Borough Commander’s positive approach ought to be welcomed and the relationship between the Council and the Borough Commander was very good. The joint partnership working with a police officers stationed within the Civic Centre had helped. Continued discussions with the Borough Commander to address problems in Wealdstone had assisted. Overall, Harrow remained a safe borough although there had been spikes in crime.
The interim Chief Executive stated that contrary to rumours, South Harrow Police Station would not be closing down. The Chair stated that it was important that such issues were communicated to Councillors quickly.
What realistic assumptions would the Council need to make to close funding gaps in 2020/21/22? What levels of income were expected during that period? What assumptions had been made in relation to the Council Tax base for future years? Why was the collection rate for business rates low? Had there been a year on year decline in yield? What assumptions had been made in relation to the possible extension of the London Pilot Pool for business rates? What assumptions had been made on the various proposals in relation to the NHS 10-year Plan?
The Leader of the Council and the interim Chief Executive replied as follows:
- that the £17.6m budget gap projected a year ago for 2019/20 had largely been closed by one-off payments from the government which Harrow might not receive in future years. This uncertainty made it difficult to plan long term. Moreover, the one-off payments were announced at different points in time which exacerbated the situation. No assumptions had been made in the budget about one-off payments for future years;
- that the 100% Business Rates retention as part of the pilot had been reduced to 75%. Harrow’s income from businesses was very low when compared with other boroughs such as Westminster. The pooling arrangement for a second year would require the agreement of other participating boroughs;
- the NHS 10-year Plan was both an opportunity and a risk to the Council as indicated in the discussions above;
- the balance between growth and savings would need to change and there was a need to identify what elements were realistic.
How was the initiative relating to Band H Council Tax being progressed?
The Leader of the Council stated that letters seeking additional income from Band H Council Tax payers were in the pipeline.
The Chair thanked the Committee for their questions. He also thanked Leader of the Council, the interim Chief Executive and the Director of Finance for their attendance and responses at the meeting.
Upon concluding the question and answer session, the Chair, on behalf of the Committee, wished the interim Chief Executive, Tom Whiting, well in his new job at the Independent Office of Police Conduct (IOPC). Tom thanked Members for their kind remarks.
RESOLVED: That the Committee’s comments be forwarded to Cabinet for
consideration.