Herefordshire Council’s chief executive, Alistair Neill has written to all staff to alert them to the fact that revised plans to reduce spending by £9million are to be taken to the council’s cabinet in May.
We are making the letter public in order to ensure that partners, customers, businesses and residents in Herefordshire understand the financial pressures the council is facing and what the likely impact will be on services.
A consultation with our employees about changes to their terms and conditions starts tomorrow.
You will be aware that Herefordshire Council faces a huge cut in central government funding. By 2015 our government grant will be an estimated 33% per cent lower than it was in 2011.
Over the past two years the council has reduced costs by £21million through efficiency savings and reductions in some services. This year we need to deliver savings of around £9million and in the next two years a further £23million. Furthermore, inflation has reduced the value of our income significantly.
When I took up the post of chief executive in March, I asked the senior management team in each service to work with the chief finance officer to review the budget and the plans to ensure we deliver the necessary savings. We cannot spend more money than we receive. Against a background of radically reduced funding from central government our plans need to be as strong and resilient as possible.
The upshot of this review was that we identified weaknesses in our plan for this year amounting to £8.4million (more detail on this is available in the accompanying question and answer sheet).
To ensure we move forward with a stronger plan and also to prepare us better for the future, we reviewed all service areas again to find further savings. As a result, we now have an action plan to deliver the necessary £8.4million of savings this year. We have also identified actions that should deliver a further £1million savings which will flow into next year, helping the council to plan at the earliest stage for the challenges ahead.
A report on these savings will be taken to cabinet in May, but broadly they are:
• We will have to cease some services that are valued by our partners and residents simply because we no longer have the funds to support them.
• We will unfortunately have to cut additional jobs. We now estimate that around 300 full time equivalent posts will be lost over the next two years through our existing plans and the additional proposals we are now taking forward. (Full time equivalent posts is a smaller number than the actual number of jobs because two or more part time jobs may be added up to make a single full time equivalent.)
• Tomorrow (Tuesday 30 April) we will begin consulting with our staff about changes to their terms and conditions which will help reduce our pay bill.
We will have to go much further in future years. The planning for those savings will start in May and we will be delivering significant savings next year. To achieve these savings, the council will have to become much more business-like.
We will focus on three core areas:
• Protecting the most vulnerable in our communities through the services we are required to provide.
• Providing the services that are most vital to our communities and which we are required to provide.
• Co-ordinating and supporting the development of Herefordshire’s economy.
Other non-statutory services may have to be commercialised or stopped.
Herefordshire Council is not alone. Local authorities across the country face similar unprecedented challenges. As in other parts of the country, we will need to consider how to best pull back from services that we will not be able to afford to deliver in the future and to release assets, such as buildings, that are no longer needed by the reshaped council in such a way as to minimise the impacts on the whole county and local communities.
This means that we will set out to our local communities where there are real, but urgent, opportunities for them to take more responsibility for services and for assets that we can no longer support. These could for example, instead of being stopped, be transferred to local groups, without additional funds. In this situation, local groups will need to demonstrate the ability to manage and sustain such services and assets locally, within the urgent timeframes that we have no option but to deal with.
Herefordshire Council will continue to play a leading role in the life of the county. We will remain a significant employer and will ensure that vital local services are delivered. We will become more business-like and efficient and focus on delivering value for money.
We will be making a series of announcements over the coming months and working hard to keep customers, residents, partners, staff, local businesses and councillors informed. I wanted to take this opportunity to explain the situation the council finds itself in and how we are responding.
I attach a question and answer sheet, which will provide more detail on some of these issues.
Chief executive, Herefordshire Council