The budget speech - February 2006

The task for Council today is to agree the County's budget for the coming year. I would like to set the context and address some of the issues which have affected the proposals which are before you.

2005 was an eventful year for the Council. It started at a low point with the recognition that our financial procedures were inadequate and with the preparation of our recovery plan. Much hard work has gone into reviewing all our processes and completing our financial recovery is now our top priority.

At the elections in May, Conservatives were very open with the electorate, encouraging them to look at the latest inspection reports and setting out clearly our priorities for the next four years. Our manifesto promised improvements in customer focus and communications; more effective use of resources; to ensure that vulnerable children are protected and the needs of the elderly met; to make improving our roads a priority; to develop recycling facilities and reduce landfill; to raise standards in our schools; to lobby for infrastructure for growth and to encourage businesses in Bedfordshire.

These were our manifesto promises and they resonated with the people of Bedfordshire to the extent that they returned Conservatives to power with our majority increased from 3 to 20.

The election also resulted in 26 councillors elected to the County Council for the first time – which has been a massive injection of new thinking and enthusiasm across all political viewpoints.

In July, Council agreed its Strategic Objectives: 'Making Bedfordshire Thrive'.  Our four major themes are to:

• Build strong, prosperous and sustainable communities
• Help children and young people to achieve their full potential
• Help those who need our support most
• Transform Bedfordshire County Council into a high achieving council

Within these four themes, we have focussed on fifteen key priorities to transform the Council and deal with the issues which are most important for Bedfordshire.  With Children's Social Services out of special measures, our top priority is now robust financial management closely followed by the need to transform central services.  Other priorities are very familiar: improving customer satisfaction; performance management; communication; recycling; road and pavement maintenance and exam results at 11 and 16. We are also looking longer term at the effective management of growth (80,000 homes) and the creation of 50,000 jobs.

It will not be a surprise that our fifteen priorities are the growth areas in our proposed budget for 2006/2007.

In the summer, the strategic partnership with HBS came to an end and we successfully transferred both the services and 547 staff back to County Council control.  I would like to thank all concerned for the smooth way in which this happened. It was not easy for the staff involved.

The next milestone of 2005 was Children's Social Services coming out of special measures, a massive achievement for both the new management team and the Service's front line staff.  Coupled with the improvement in Adult Social Services, this led to our first Social Service star award for three years. We are a one-star authority – but we were very near to achieving two stars, which gives us our target for 2006.

Finally, the Audit Commission recognised – in the Direction of Travel Statement published in December – that the Council is 'Improving Well'.  We currently have one star in CPA terms and we have made no secret of our ambition to be a three-star council in 2007.

Apart from wanting to see the Council formally recognised through the CPA process as being good, for me, the requirements of CPA equate to being a well-run Conservative Council: effective use of resources; performance management informing decision-making; empowering individuals and the community and helping people when they need it.

So, we have completed the first stage of our improvement journey.  We now need to quicken the pace of change; start looking forward instead of back and become entirely focussed on our priorities and on our customers.

This is the policy context in which we are setting our budget today.

And what hand has the Government dealt us? Well, our grant settlement at 2% is the equal lowest of any council in the country. On top of this, the Government has stopped a number of specific grants, mostly in Social Services.

Grant funding to councils for the coming year has been based on a new formula which is complex and not at all transparent. The new formula changes are so dramatic and would have such an impact on some councils, particularly in the South-East, that there has had to be a system of damping to mitigate the losses from the application of the formula. This means that Bedfordshire stands to lose another £6m over the next few years.

There is a real shortfall in Government support to councils compared to the need to maintain our services. As part of the formula grant for 06/07, the Government indicates what we need to spend on all our services. Based on the Government's own figures, this would have required a council tax increase for Bedfordshire of over 18%. Apart from the justifiable outrage if we had set council tax at that level, the Government has indicated that it will bring in capping above 5%.

Counties in different parts of the country get treated differently. In Bedfordshire, the Government gives us £151 to spend per resident. Contrast this with Co. Durham, which gets £273. I believe there's a constituency called Sedgefield in Co. Durham with a rather high-profile MP. Perhaps the two are not connected.

There are also huge regional variations across all types of councils. On average, councils in the Eastern region get less than two-thirds of the grant per head than those in the North-East and North-West.

Now that the Government is directly funding schools from a ring-fenced grant, Bedfordshire is having to fund nearly 71% of its budget from council tax-payers, compared to many Labour authorities in the North and the Midlands who have to fund as little as 30% of their budget from council tax.

Not only is the Government less than generous with its grant funding, it is also making ever more legislative and policy demands on councils without providing the necessary funding; for example, re-structuring into a children's directorate and the demands regarding waste disposal, with a punitive increase in landfill tax. Nor must we forget the ever more complex inspection regime. One county council has estimated that a CPA corporate inspection cost it £300,000. A harder test in more ways than one.

The biggest Government demand of all is Prescott's Sustainable Communities agenda requiring 80,000 houses to be built in Bedfordshire. The need for this number of houses has never been justified but we have had to accept that it will go ahead. The Council will need extra capacity to plan for this major growth, both for infrastructure and community services. This has not been recognised in our grant settlement. We have also been lobbying hard for the necessary transport infrastructure and are very disappointed that funding for vital improvements in the growth area, particularly the Dunstable Northern Bypass, has been put back by several years.

Then we come to the government's dithering on pensions – in general, but more pertinently on the Local Government Pension Scheme. They have refused to take the hard decisions on raising both retirement age and employee contributions – and council tax payers are left to pick up the bill, with employer contributions rising to over 20% in the coming year.

So what does the settlement mean for Bedfordshire? Well, turning to the expenditure side of the budget, we are facing unavoidable pressures. Inflation for the Council is running at 4% overall. There have been particularly high rises in fuel costs and landfill tax is rising by 16%. Then there is demographic growth – and in particular, the numbers of older people and those with learning disabilities are growing fast. These are the vulnerable people who need our support. We were facing a potential council tax increase of 8% before any investment in our priorities or any financing of the capital programme. The capital programme is vital in that much of it is designed to give future revenue savings and increased efficiency.

We have already made significant efficiency savings which have helped us to keep council tax in check. The Government has required us to make savings of 2.5% a year; our internal target is 3% which we have exceeded by achieving £6.6m of efficiencies this year. Interestingly enough, government departments have the same target and they are struggling to make the necessary efficiencies. Local government overall has done significantly better than national government. Counties in the Eastern Region have identified a staggering total of £73m of efficiencies for the coming year.

A great deal of work has gone into balancing the funding deficiencies, the budget pressures and the efficiency savings, and the budget which is before you today keeps council tax at an acceptable level and protects and invests in key services. Most importantly, we have listened to what people have told us and areas like road maintenance and recycling will get substantial investment.

I said that council tax will remain at an acceptable level. I know that it is still too high and that the increase is higher than many people will want.

The system of council tax is complex and difficult for the public to understand. Council tax has gained a bad reputation through the large increases over the years caused by intense pressure on services, the need to meet nationally imposed standards and rising public expectations. These increases have been larger than the widely known rate of inflation and therefore perceived as unfair. But the Retail Price Index is based on the cost of a basket of shopping and bears no relation to the increased costs faced by councils. I would urge the Government to introduce a way of measuring local government inflation which would be transparent and could then be reflected in future grant settlements.

I recognise the huge burden that council tax is to those on relatively low fixed incomes, particularly if they live in large expensive properties. Another of our manifesto commitments was to lobby to reduce the impact of council tax for those who are retired or on fixed incomes. This could be through a reform of council tax benefit which moves away from means testing. I look forward to Sir Michael Lyon's proposals when he is eventually allowed to publish his report.

But council tax does have a positive side. It is a tax based on property and is easy and cheap to collect. Any move to a tax based on people – income tax or anything else – will result in a greatly reduced collection rate and therefore a greater burden on those who do pay their taxes.

In a moment, the Cabinet Member for Finance will introduce the detail of the budget which this administration is proposing today. It is a budget which will enable us to address the current needs of people in Bedfordshire and plan for the future. It is a budget which focuses on the Council's priorities, those things which we know are priorities for the people we represent.

I know where I want to see Bedfordshire County Council. We need to provide strategic leadership for the County as well as the Council, working closely with partners. We need to evolve an identity for Bedfordshire – bringing together diverse interests into a community of interests which recognises itself as Bedfordshire. And we need to provide a coherent voice for the County at regional and national level. We must provide efficient and effective services at a level people are prepared to pay for through their council tax. And we need to be an organisation that is responsive to its customers and communities and is able to adapt to changing needs.

That is the legacy that this Conservative administration wants to leave to our community in Bedfordshire and the budget before you today will enable us to take a large and positive step forward to achieve these aims.