statement by Angus Council Depute Leader and Finance Convener, Cllr Bill Duff, made at this afternoon’s Special Meeting of Angus Council, below…
Budget Speech March 2nd, 2023.
Once again, I should like to start by thanking those that participated in preparing this budget and acknowledge the assistance I’ve been given.
Support from officers within the Finance Directorate has, as ever, been very good with the usual standards of impartiality, professionalism, and sound advice. I should like to thank my fellow members of the PBSG, Cllrs Whiteside, Braes, Cheape, Beattie, Wann, Gall and Doran. Once the parties split in mid-January, the administration members only were involved in setting the budget. Special thanks go to the Finance Team: Steven Mill, Gillian Woodcock, Jill Rennie and Daren O’Shea who provided close support to PBSG and assisted in producing the administration budget. Our Finance Director Mr Ian Lorimer has of course been pivotal to the whole exercise and I ‘d like to thank him for his hard work, guidance and advice. The whole CLT team have of course participated, and I’d like to thank all directors and their senior staff who have assisted. And I should like thank all members of the Administration Group for helping to produce what is very much a collegiate budget.
Its normal to thank past colleagues and I like to mention former councillor Alex King who served as finance spokesperson for the SNP in Tayside Regional Council, Angus District Council and Angus Council and was very much the master from whom many of us learned. Cllr King was responsible for the strategy which delivered five new primary schools in Arbroath and that is a fitting legacy for his time as finance spokesperson in the previous SNP administration 2012-2017.
Wider World/Political situation
The old Chinese curse, “May you live in interesting times” is apt I think for the current world situation. Nobody expected a war on mainland Europe, and nobody predicted escalating Gas prices.
Nobody expected Trussononomics during the hapless premier’s 49-day reign, which drove the pound down, bond yields up and threatened the stability of much of the UK pension market. We have seen interest rates rise, hitting mortgage payers, businesses and councils. And we have the catastrophic mistake that was Brexit which is hitting the UK economy in all sorts of negative ways.
General Revenue Position
The Council Grant settlement was marginally better than we had predicted at £261.003 M. Once ring-fenced funds had been excluded this afforded £252.775 M, 2.1% higher than last year.
Table 2 on page 389 gives the Gross funding gap of £20.929 M on going and £5.005M one-off.
This has to be funded by a mixture of Reserves and Council Tax rise.
I will briefly touch on Service Concessions which is a slightly complicated topic but nonetheless brings substantial benefits to Angus Council.
Angus Council has five PPP/PFI/SFT deals. One of these is a very small one and this sits with HSCP. There are four specifically Council projects total £142 M and these are repaid over 26 to 31 years. The payments include principal repayments to the lender, and this is done much faster than the asset is consumed, with schools for example having a life of at least 50 years. The Service Concessions which have now been approved by Scottish Government and today by this Council allow us to write down the principal repayments over the asset life and hence reduce our annual charges to the Revenue account.
This treatment gives us a Revenue benefit for 23/24 of £2.9 M and this benefit will be maintained at this level for about ten years. In addition, we benefit from a retrospective review of payments made which yield £22.9M in excess payments made since 2005. This figure will be credited to our General Fund usable reserves.
It is worth pointing out that contractual payments for such items will not be affected and no cash is involved, merely the accounting treatment.
I will now cover how this administration plans to use this welcome windfall.
Use of Reserves
The Councils Reserves both conventional and those generated by the Service Concessions will be added together and distributed into three pots.
These comprise a Spend to Save Reserve, which will be used to fund projects that increase income and to pay for necessary reconstruction of the Council’s activities in order to achieve a balanced budget over the next few years.
We are currently suffering from exceptional inflation, some caused by global events such as the War in Ukraine. The council has seen exceptionally high costs in the area of Care Experienced Children which members will recall being described in recent reports. It is anticipated that these exceptional costs may persist for a while. It needs to be noted that the Council has indicated that it will increase its in-house accommodation for such children and that will in time address this exceptional cost pressure. Therefore, to address these areas we will create an Exceptional Cost Pressure Reserve.
The final pot will be a Reserve Drawdown Strategy to allow the Council to Balance the Budget over the forthcoming five years. This will allow us time to reshape our spending and increase our income so that in time we reach a balance. We will taper the use of these reserves so that each year we will use less than in the previous year. We believe that this is a prudent and measured response to our current budgetary difficulties.
Revenue cost reduction
We are interested in potential commercial activities to increase our income.
I will start with the thorny topic of Town Centre Car Parking Charges. These were introduced in 2018 by the previous Conservative led administration without any economic impact survey.
Parking Charges are currently paused and that will continue for another year. The Administration has asked officers to carry out an Impact assessment on the charges on local businesses.
The administration is keen to look at potential for parking charging at tourist focused places and to examine feasibility of taxing of Motor caravans.
The Scottish Government has devolved collection of NDR for empty property to Councils. We are interested in seeing if there may be additional taxation opportunities here or with second homes.
The proposed Transient Visitor Tax may be some years away but that is another source of finance we might be interested in looking at.
The council will reduce the temperature at which our buildings, including schools are maintained. The reduction to 18 C will save £500,000 per annum and will also reduce our carbon footprint by 1400 tonnes of CO2.
We will move to centralise property maintenance affording a potential £100,000 saving.
Savings in fleet management will afford a £25,000 saving.
The Council plans to review staffing over the next three years, taking advantage of collaborations with other authorities, organisational redesign and efficiencies. For 23/24 we are anticipating savings of £500,000 in this area.
It is recognised that maintaining our roads and providing winter services is critical to the people of Angus. This is reflected in our Council Plan and proposed performance target for repairs and maintenance of our roads. We are proposing a saving to our cyclical roads maintenance budget but will couple this with continued capital investment in our roads infrastructure and increased operational efficiencies.
For future years, we aim to undertake a wider review our roads network and assets and will consider the opportunities for re-classification of some of our roads to walking and cycling “Green routes” so we can prioritise our resources where they are most needed.
The financial challenges we face means we do need to review our public transport provision and the bus service that we subsidise across Angus. We are proposing the withdrawal of routes A670 and A673 from Sidlaw area which travel into Dundee. Dundee City Council withdrew subsidy from this route several years ago and research shows only 6.6%% of customers are Angus residents. So, at present, Angus Council is essentially supporting Dundonians travelling from edge of city into the city centre. This measure will save £137K and we will re-invest £37K to replace these routes with a pilot Demand Responsive Transport scheme that involves using smaller vehicles, advanced bookings and fewer overall journeys that is better financially and for the environment.
Our Parks Department have had success selling their expertise and we anticipate an additional income of £250,000 in 23/24.
Our Parks team continue to be the grounds maintenance provider of choice for external organisations such as local housing associations and our waste team continue to collect from over 1,000 commercial premises. We are also benefiting significantly from a profit share agreement associated with the sale of electricity generated at the energy from waste facility in Dundee where we send our non-recyclable waste (order of £1M). We are also looking at more opportunities such as the development of a solar farm at our former Restennenth landfill site.
Recycling Centres have been a contentious area for many years. Angus with a population of 116,000 has seven centres.
We cannot afford to maintain all seven recycling centres in Angus. Some do not benefit from much use, and others are expensive to run. We also recognise the agreement we have reached with Dundee City Council for residents in the Monifieth and Sidlaw ward to use recycling centres in Dundee. We are therefore proposing a network of five recycling centres that still provide good access to recycling and we will continue our ‘meet and greet’ approach’ at centres where staff engage with and encourage visitors to separate and recycle as much as they can.
An Options Appraisal has been carried out and both Kirriemuir and Monifieth centres will close. Both centres handle small amounts of waste material, and both have alternative centres close by. In addition, Monifieth requires an expensive wayleave from MOD which costs the Council £25,000 pa. The potential sale of the Monifieth Centre should afford a capital receipt for the Council.
Our Finance and Change Plan targets significant savings from the review of our kerbside recycling service. We have recently completed a community engagement exercise on our kerbside recycling service and the results will be used to shape the future of our recycling services. We aim to deliver savings through efficiencies and by aligning our services with the Deposit Return Scheme for Scotland to be introduced in August 2023. It remains far cheaper for us to recycle our waste therefore our focus will continue to be on maximising how much we recycle and improving on our already excellent recycling record in Angus.
The Green Bin charge for removal of Garden Waste, a very successful venture initiated by the previous SNP Angus administration (Cllr Donald Morrison and Mr Dailly) and now copied over much of Scotland will increase from £30 to £40 per bin affording a potential £200,000 additional income. This measure will help recoup running costs and is generally born by those in our society most able to pay this increase.
Vibrant Communities and Sustainable Growth
There will be a reduction of £200k (32% of the 2022/23 net expenditure) in the provision of economic development services which will require a Service Review to be undertaken. The review will focus on identifying future priorities based on the new Angus Economic Strategy which will shortly be finalised and continuing to contribute to delivery of the Tay Cities Regional Economic Strategy. The service will continue to maximise income from our property portfolio and delivery of skills and employability services all of which have opportunities to secure additional external funding. Capitalising on the alignment with Planning, Climate Change and Environment functions, and the opportunities presented through the new planning legislation, it is proposed to more closely align the work of these teams, shifting the focus to project coordination and delivery.
In light of budget pressures, it is proposed to reduce provision of Anti-Social Behaviour services and a service review will be undertaken in 2023/24. A reduced budget will mean a reduction in our offer and staff numbers and focusing resources on support to council tenants and reducing the level of service to private households.
The Vibrant Communities team is currently in the final stages of a service review which will realise savings of £350k in 2023/24 This equates to 22.5% of the 2022/23 budget for 2023/24. The proposed changes see a move away from 4 equal locality-based models right across Angus to a thematic model where services will be delivered based on need and evidence to ensure we are supporting the people that need us most, that we are not duplicating provision from other partners and that we are more efficient in what we do.
A further reduction in budget is proposed of £650k in 2024/25 however, the non-statutory services of Vibrant Communities are preventative in nature and with the current cost of living crisis impacting people and communities alongside entrenched poverty faced by some people and communities, it is proposed to change the way in which we deliver preventative services to a more integrated and targeted approach. In changing the approach, it is considered there is a need to work even more closely with partners and communities while at the same time delivering savings. To maintain a core approach to prevention and change the way the service is delivered. A service design exercise will be undertaken to consider what other services should integrated to ensure that the delivery of preventative activity can be both sustained and developed.
Since 1996 Tayside Contracts has been the collaborative and commercial operating arm for the three Councils in Tayside. In partnership with ourselves they provide essential public services to the people of Angus ranging from school catering to road and footpath maintenance to keeping our roads safe and passable during the worst of winter weather.
This model of partnership working across organisational boundaries delivers many benefits and we need to maximise the value that get from such arrangements. Like all other council services though Tayside Contracts have seen their costs increase over the past year, primarily as a result of inflation and nationally agreed pay awards. This has placed unsustainable pressure on council budgets that pay for these services.
We have therefore included within our change programme ambitious but very realistic savings and efficiency targets for Tayside Contracts totalling £1.1 million over the period to 2025/26. We expect these to be delivered through a combination of internal business efficiencies to ensure their costs deliver best value and expansion of their commercial activity to increase income from other sources.
I would highlight that these requirements for efficiency and business transformation are the same as those being delivered by internal council services and bodies including Angus Health and Social Care Partnership and ANGUSalive.
Angus Health and Social Care Partnership
Funding to AHSCP will be flat cash as in previous years with an additional ring-fenced amount of £3.3 M From Scottish Government. One of my colleagues will say more on this topic.
Angus Alive is the Councils culture, sporting and leisure ALEO with its own board of directors and executive team. Angus Alive receives a Management fee from the Council to support its operations. As part of the Councils need to cut costs, the savings value for 23/24 will be reduced by £500,000 and similar reductions are planned for the next two years.
For 23/24, the board of AA has identified several savings consequential on the decisions we are making today.
These are as follows:
Withdrawal from Montrose Basin local nature reserve
Hand Gateway to the Glens Museum in Kirriemuir back to Angus Council
Hand Brechin Townhouse Museum back to Angus Council.
Hand Arbroath Community Centre back to Angus Council
Hand Inglis Memorial Hall and Library Visitor Centre back to Angus Council
While these measures may be disappointing, they do not address the magnitude of saving required to match the reduction in management fee for 23/24 and the two subsequent years. There will be a need to be further significant restructure of Angus Alive to meet the major financial challenges ahead.
Additional One-off funding
As well as the regular revenue funding, this Administration is allocating Reserves to support a number of one-off projects for 23/24 and in one case 24/25.
These are as follows.
Holiday Food and Fun
This successful project has been run for several years and aims to provide activities and a decent meal for vulnerable children and families during the long summer vacation. We are proving £200,000 to support this valuable work.
Additional Welfare Rights Staff – temporary for 23 months
We are allocating £100,000 to support additional staff resource to address the pressure on Welfare Rights due to the cost of livings crisis. This will run for a 23-month period.
Hardship Fund / Continuation of some LACER funded projects
The funding allocated from the Scottish Government through the LACER programme will soon be exhausted. The Council cannot afford to replicate that scale of funding (nearly £1.7m) but it is proposed to set a sum aside to continue to support those most in need. We are allocating £275,000 to support activities previously supported by LACER.
Provision for Education and Lifelong Learning (ELL) budget risks.
There are several uncertainties and risks in relation to the ELL budget including government grant conditions in relation to staff numbers and ongoing uncertainty over pay. A sum is to be set aside in reserves as a commitment until such time as those risks and uncertainties have been clarified. This again is this administration making prudent provision for current uncertainties in this area. We are allocating £350,000 to this.
Use of Reserves
Balancing Budget and Council Tax
From Report 54/23, page 389 Table 2, the Gap that this budget has to bridge is £25.934 M. This will be met by applying the Change Programme savings (£13.327), increased charges(£0.291M) and increased Council Tax yield (£0.442M), a mixture of Council tax increase and prudent use of council Reserves.
The administration is proposing a Council Tax increase of 6% for 2023-2024. This is more than has been seen of late but needs to be seen in context of UK inflation running at 10-12% and taking note that Angus Council tax rate is the second lowest in Mainland Scotland, being £100 below Scottish Average at Band D level. Comparison with our near neighbours is instructive. Both Aberdeenshire and Perth and Kinross have CT £100 higher than us, and Dundee has a Band D tax £177 more than Angus.
Members will note that we have increased the provision for CT relief by £288,000 to ensure that those with difficulty to pay increased tax are catered for.
The proposed CT increase will raise £3.575M leaving a gap of £8.299 M. The use of Reserves will be deployed to bridge this gap (see statement 2 in the Motion).
It is my intention to give the Angus public an insight into our three-year plan regarding stewardship of the Council’s affairs and likely Council Tax levels. The change programme outlines reduction in spending and increase in charges. On Council Tax, my expectation is that Council Tax will increase by about 6% in each of the next two years. This forecast obviously depends on inflation and other factors outside the Council control.
The Capital Plan (see page 453) amounts to £127.046 M over the five-year period. We are allowing 12.5% overage to cope with slippage. We have also prudently increase contingency to £5.70 M.
The plan is inevitably dominated by Monifieth Learning Campus which at £56M is the Council’s largest ever investment. This clearly constrains us on other potential capital investments.
The Council Capital plan is dominated by Monifieth Learning Campus. Design work is underway, and it is anticipated that final costs will be available by May cycle P& R committee and then the decision will be taken to legally commit to this project.
If I may express a personal view here. I believe that Monifieth may be the last such secondary school that Angus Council can afford to build. The bulldoze and rebuild strategy going forward is in my view unaffordable, given the huge inflationary pressures that have seen new build secondary school costs rise from £18 M (Carnoustie) in 2008 to £56M with Monifieth in 2025.
The Angus Council School Investment Strategy was approved in 2017 as a long term 30-year vision to improve our entire school estate. Our vision for our school estate is to create “The best quality learning environments for all of our children and young people, and which makes the best use of the resources available” and over the past 5 years the Council has progressed the delivery of the strategy, culminating with the Monifieth project.
In January 2018 the Council agreed that our school improvement programme should be reviewed, updated and presented to the Children and Learning Committee by September 2020. After a period of slow progress, it is now timely to undertake this review and refresh our strategy and associated school estate programme. Officers will bring an initial report to the Children and Learning Committee before the summer recess.
Route Action Plan Montrose to A90 Road Link and other Montrose developments
The Montrose to A90 Road Link has been in the Council’s Capital Plan for some time.
It’s worth briefly recapping the history of this project. The original concept was to run a road from Montrose to the Stracathro junction on the A90 to allow HGV traffic easy access to this North-South main road. This would also remove HGV traffic travelling to Montrose from the streets of Brechin.
The funding of this project was always problematic. The Council Capital plan shows this as a £15M project with £10M potentially being provided by Tay Cities Deal (TCD) money. However, the Angus Fund was primarily for innovation not infrastructure and only £2-3M of the £26.5 M fund was allocated to transport projects.
What is clear is that Angus Council has spent over £750,000 on this project, mainly on consultant fees and the preferred routes all terminate at the south end of the Marykirk Bridge (1814 pre-Waterloo), which is narrow and on the north side, the land is prone to flooding. Marykirk village has a narrow main street.
The cost of these proposals was in the envelope of £30-50 Million. That of course does not address a new crossing of the North Esk River at Marykirk, nor an essential by-pass for that village. These issues could obviously be shared with Aberdeenshire Council, if they were agreeable.
For the reasons above, this administration is now cancelling this project as it is neither logistically viable, nor has it met its design specification and is now financially unaffordable to Angus Council.
This administration recognises the significant economic opportunities that exist in the Montrose area with the expanding offshore wind sector which significantly benefits Montrose Port and the Zero Four development to the north of Montrose where Crown Estates is developing a business park to cater specifically for offshore and Port related traffic.
£75,000 will be made available to support a study to capitalise on the emerging opportunities from the offshore wind sector as well as supporting our existing businesses in Montrose investigating opportunities between the north of the town and Montrose Port
The study will explore how we can incorporate active travel, road safety and smart technology for all road users, as well as supporting the development of a robust business case to release Tay Cities Funding (£2.6m) as part of the Angus Fund programme.
One off Investments for 23/24
This administration is committing resources to support several important Capital projects on a one-off basis.
These are as follows.
Investment in road and other core infrastructure repairs.
Our Roads are under increasing pressure due to more variable weather and suffer from under investment due to long standing financial pressure on Angus Council in common with most other areas in Scotland.
To improve matters, we are providing an addition £1M of funding to augment our Roads Capital plan for 23/24 which sees investment rise from £4.911 M to £5.911 M, an increase of 20%.
Investment in Climate Change / Net Zero / Biodiversity
Several years ago, this Council declared a climate emergency. We are providing a fund of £1 M to support projects which help to address climate change, reduce our carbon footprint or address increasing biodiversity. This was a regular feature of opposition budgets in 2017-2022 and the new administration are consistent in our priorities.
Minor repair works – Arbroath Harbour
The Capital Plan includes £300k for improvements to the Breakwater at the Arbroath harbour. In addition to this, the administration has acknowledged other essential maintenance work at this key Arbroath asset that requires attention, and we are providing £100,000 to address these issues.
I have not mentioned everything that has changed in this budget but kept my remarks to the most significant issues.
This has undoubtedly been the most difficult budget Angus Council has had to present. The financial pressures are extreme and forward view is no better.
The administration has attempted to balance many factors.
Protection of the most vulnerable
Focus our resources on the most critical areas to support a long- term plan.
Increase our charges to ensure the long-term viability of the Council.
I commend this budget to the Council and ask the leader Cllr Whiteside to second.