Priorities for 2019/20 set with budget decisions

With the 2019/20 budget meeting now concluded, as officers we have clear instructions from elected members on the priorities for the year ahead.

My appreciation goes to the finance team, led by Jonathan Belford, for their diligent and exhaustive work over a period of weeks and months as well as the governance team, led by Fraser Bell, for steering us through two complex Council meetings on consecutive days. The preparation was comprehensive, not least given the scale of the task in preparing and gaining approval for the updated scheme of governance

Thanks also to every officer who has been involved in the budget process, with valuable contributions coming from all quarters.

I’m appreciative of the positive attitude and commitment staff across the organisation display in every circumstance and that is always very evident as the budget process reaches its conclusion. The prospect of change can be unsettling and, given the scale of the financial challenges we face, this year’s budget report contained a wide range of proposals for change in all areas of the organisation. Thank you for your efforts in maintaining business as usual and continuing to show the support and care for our customers that is so important to everything we do.

I hope colleagues managed to read the budget report in advance of Tuesday’s meeting. I can now provide you with a summary of the budget decisions as well instructions I received at the budget meeting.

In terms of Income, council made the following decisions against the backdrop of a reduction in our revenue grant of £6.6m.and an overall funding gap of £41.2m:

  • To increase Council Tax by 4.5%;
  • To increase a range of fees and charges: A number of proposals were put forward, with the potential to realise additional income of more than £1.6m, and many of those have been adopted by members. A variety of charges were increased at rate of 3% (for example creative learning classes, library late fees, event space hire and high hedge notices to name just some) whilst the following specific charges were also applied:
    • Parking charges will rise, as will the cost of parking permits by £10 per year for the first permit and £20 per year for the second;
    • A new fee for garden waste collection has been introduced, with a charge for brown bin collections for the first time, but it has been set at £30 per household rather than a higher monthly rate. This is expected to raise around £800,000 annually;
    • In the housing budget, an increase of 4.3% to Council house rents was approved.

In terms of the expenditure side, Council made the following decisions:

  • Staff costs: Council approved the proposed further reduction in our workforce through voluntary severance and early retirement, reiterating the commitment to no compulsory redundancies. This commitment applies to all of the decisions taken at yesterday’s budget, including those relating to changes in service provision or delivery. We have budgeted for a further 260 colleagues choosing to leave through VSER, but it’s important to acknowledge the overall reduction in numbers in the year ahead will be greater than that as we continue to limit external recruitment when vacancies arise. You will already have seen an increasing number of posts being filled by advertising internally and that will continue as we take a flexible approach to ensuring staff resource is being allocated to best meet the needs of those we serve in a more efficient way. Members did not accept proposals that would have led to a review of terms and conditions for Council staff in 2019/20, but did issue an instruction to me to begin negotiations with Trade Unions to consider locally agreed terms and conditions moving forward. In recognition of the necessity of digital transformation in order to underpin the release of staff through VSER, members approved the continuation of the transformation fund in order to ensure appropriate investment is available for the required technology.
  • Assets: Members took all the options relating to the further rationalisation of our estate resulting in reducing the number of buildings we use and getting more from those that we retain. Examples include continuing preparations to move staff out of Frederick Street, taking ourselves off our site at Kittybrewster as well as progressing with options for the co-location of partners such as Police Scotland into Marischal College. Members understand that capital receipts are required to provide a funding source for VSER payments, as councils are not allowed to borrow to fund the cost of change. Council agreed to permit the sale of a number of assets in order to provide the necessary funds for VSER.
  • Contracts: Contract spend is a major part of our overall expenditure, covering the diverse range of goods and services we purchase each year. Close to £4m of savings are budgeted for 2019/20 following decisions in the chamber yesterday by reducing the levels of purchase. Further savings will be made through the use of national frameworks to reduce costs and close to £2m through reviewing and reducing the costs associated with many other contracts. The message around contract spend is a familiar one but just as important today as it was last year and in previous years – every penny counts and we all have a duty to ensure best value.
  • Arms Length Organisations: Members have opted for some changes in the funding to our arms length organisations. Sport Aberdeen will be the subject of a £550,000 reduction in funding. Aberdeen Sports Village funding reflects the commitment to the joint venture agreement, on the proviso that investment is made by ASV in a proposed new 4G rugby pitch.  Bon Accord Care is not directly impacted as the IJB budget setting process has yet to be concluded. Aberdeen Performing Arts will be the subject of a small reduction in revenue funding but benefit from a Common Good Fund grant that will protect events such as Granite Noir. The IJB will receive additional funding, as will the Grampian Valuation Joint Board.
  • Grants: External grant funding is an area that understandably has been the subject of a great deal of scrutiny in our communities, with groups concerned by the prospect of reduced funding. There were reductions in external funding to various organisations, including VisitAberdeenshire, but members also committed to protecting grant funding to a number of groups in the budget approved yesterday, including the Workers Education Association, Aberdeen Lads’ Club, the Grampian Regional Equalities Council and the community initiatives at Fersands, Middlefield, Printfield and St Machar. The Fairer Aberdeen Fund has also been protected. There is an acknowledgement that external funding will continue to be reviewed as we move forward, but also a recognition that we must work closely with community groups to ensure solutions that enable us to deliver on the objectives of the Local Outcome Improvement Plan (LOIP).
  • Capital programme: The General Fund Capital Programme budget delivers infrastructure projects across the city and £182m will be invested following budget decisions. This includes the completion of The Event Complex Aberdeen and refurbishment of Aberdeen Art Gallery as well as City Centre Masterplan projects including the renovation of Provost Skene’s House and community facilities including the Tillydrone Community Campus. A commitment to the Union Terrace Gardens project and the programme of new school construction was also made.

In light of the above, the Council now has a balanced budget for 2019/20.

Planning to deliver – the year ahead

So while the ink may not have set yet on the council budget, we must now create a momentum around our delivery. Whilst our transformation programme has helped council to set a balanced budget in 2017/18 and 2018/19, our 2018/2019 end of year outlook still looks unfavourable because of the continuation of demand pressures we face. It’s therefore vital that we redouble our efforts to deliver all of the approved budget options in order to get ahead of the growing demand pressures we face.

In addition to receiving the budget reports, members also noted the new Council Delivery Plan. I would ask every member of staff to take time to read through plan, which was approved during the budget meeting.

It summarises the way in which the next phases of transformation will take shape and sets out our clear priorities for 2019/20 arising from the council’s policy statement, our commissioning intentions for council services as well as our contribution to multi-agency improvement priorities contained in the recently approved refreshed LOIP: https://bit.ly/2H1ONgu .

The spending priorities for the year ahead have been set using the LOIP as the foundation, tying our budget back to the LOIP vision of Aberdeen as ’A place where all people can prosper’.  Our purpose is to ensure that the people, place and economy of Aberdeen do prosper but in the event of harm happening, to be one of the first bodies to be there to rescue people and place from harm and to help them recover from the harm. With diminishing resources, the LOIP is vital in ensuring we target resources where they can really drive positive outcomes.

The Council Delivery Plan is a clear statement of our priorities for 2019/20 and all staff objectives for the year ahead will be derived from it. More detail will follow on the way we will improve that process for staff, with the aim of ensuring every individual is clear on their part in delivering outcomes and can relate to the overarching ambitions we have for the city.

As I said previously, we need to collectively have a strong belief in ourselves and that we have the ability to change our organisation in a way which responds to these challenges. We owe it to all those people in Aberdeen who rely on the Council, to make sure that we can continue to provide the support they need – and that will involve doing things differently in order to live within our financial means.

Planning ahead – The medium term outlook

When we set off on our transformation journey the estimate was that in the region of £125m of savings would need to be identified over a five-year period, or around £25m per year. What the 2019/20 funding settlement and budget has demonstrated is that was a conservative estimate, with £41.2m required this year alone. We do expect the gap to fall to around £25m each year for the next two years, with current estimates for a £19m gap in 2022/23 falling to around £11m the year after – so combined efficiencies of £90m in the four years ahead.  We are currently placing reliance on the Scottish Government’s medium term financial strategy for forecasting our medium term financial position. Of course, we will have to await our financial settlement notification from Scottish Government in order to confirm the position exactly.

The short to medium term picture is clearly one of continued financial challenges, we can’t sugar coat that and I wouldn’t want to. As soon as the budget meeting finished in the chamber, my thoughts and those of the senior management team were already turning to 2020/21 and continuing to drive improvements and efficiencies. Colleagues from all corners of the Council have stepped up with suggestions in response to the invitation to submit ideas to support the aims of reducing spending and increasing revenue. Every one of those is being considered for 2020/21 and I’m looking forward to providing updates soon.

I continue to need your support and input by:

  • Identifying where you feel resources, money or efforts are being wasted or where things could be done differently to save money and reduce spend;
  • Being open to doing things differently as options for doing so come forward;
  • Making an investment in your future within the Council, by being proactive about shaping the Council’s future.

Whilst there has been a focus on the gap we have to close, it is also important to underline what we will spend in the year ahead to make a real difference to the people and place – in the region of £700m that we will use to meet our aims. That is a real positive we can all reflect on.

With the clarity the budget meeting provides on the priorities for 2019/20 it’s important we take the impetus that provides and push forward once again. Thank you in advance for your support and energy as we prepare to embark on the new year.