WBC’s 2025-26 budget has now been finalised (though requires approval at Full Council on 27 February). It doesn’t make for particularly happy reading.

As we’ve mentioned many times, pretty much every authority is in the same boat, particularly ones (like West Berkshire) which have responsibility for social care and children’s services. It’s there that the real pain is being felt. These are statutory responsibilities which the council runs on behalf of, and according to regulations set down by, the government. From occupying perhaps 50% of WBC’s expenditure a decade or so, these now account for nearly two out of three of every pounds spent (out of about £187m in all).

Savings and reserves

A number of savings totalling about £5m have already been found. Some of these required consultation while others did not.

Of those that did, most of the proposed cuts have been acted upon, including changes to ASC Resource Centres, increasing some ASC fees, ending the mobile library service and (see the “precept and council tax” section below) managing fewer dog and waste bins.

Two that have not been acted upon are ceasing the provision of the Adult Respite in the Community service and withdrawing the Downlands Centre from the Leisure contract (which would probably have resulted in its closure). Another, about turning off streetlights in the wee small hours has been moderated, with these now being dimmed. Pressure from PCC Matt Barber may have had some influence of this.

None the less, further savings of perhaps £11m are still needed. Efficiencies of various kinds will be amongst them.

The reserves have also fallen to a dangerously low level of about 2% of the net revenue budget, well below the level the council’s auditors feel is prudent (5%) and pretty much the lowest in the country. Driving along with the fuel indicator light flashing is not a great look. If WBC is not very careful, the next step will be the issuing of a S114 notice, an effective admission of bankruptcy.

There is a stage before that, however. This is Exceptional Financial Support (EFS), described in this WBC statement as being “temporary financial assistance provided by the government to local authorities that are facing severe financial difficulties.” WBC has requested £16m from this source, much of which will then go into reserves and can be used for day-to-day spending as required. This loan needs to be repaid, something that can happen from the sale of capital assets such as investments.

Capital and revenue

Hang on a moment – isn’t that breaking the rule that draws a rigid distinction between capital and revenue? Well, yes and no. The escape clause here is known as a capitalisation directive. The explanatory document goes on to say that this “allows local authorities to treat certain revenue spend as capital spend. This means that instead of funding these costs from the revenue budget (which must be balanced annually), they can be funded by borrowing or from capital receipts, ie asset sales.”

It is, in other words, an accounting sleight of hand that allows councils to sell assets that were bought as investments (which recent government policy now discourages) to plug holes in the revenue budget. This is obviously a tactic that will only last for as long as councils have assets to sell. Then what?

In some cases, they might be selling them at a loss. This is something that’s more likely to happen now that the investment industry knows that, at some point, the council will have dispose of some or all of them. This won’t help to create a sellers’ market.

Nor would WBC be disposing of property that it completely owns. It has about £40m of such assets but that doesn’t mean that a sale will raise this in profit – the loans and repayments are only a few years into their terms so the bulk of the capital still needs to be paid off.

For councils that have no such assets, this option isn’t open to them at all. How matters will work if they need EFS I have no idea.

Hovering in limbo

This isn’t the only form of fiscal chicanery at work. As we’ve mentioned before, the SEND costs – which I believe to be about £17m, and rising, in WBC’s case – are hovering in an uneasy limbo between WBC’s balance sheet and the government’s.

Taken together, this and the EFS (when in place) means that about £35m of WBC’s debt has sunk into a kind of half-world where the distinctions between capital and revenue and between a council’s financial obligations and the government’s are becoming dangerously blurred. Between them, they show what a mess local-government funding is in and what desperate expedients are being resorted to in order the keep the ship afloat.

CapEx

You can read a statement from WBC about the proposed budget here. This starts off, and devotes much of its detail to, a consideration of the various capital projects which the Council is or will be undertaking, to the tune of £73m. About a quarter of this will go on the new solar farm at Grazeley. Schools, roads and rivers are also set to benefit.

This is capital expenditure, with loans and grants secured for that purpose, and can’t be switched to covering day-to-day costs – unless, of course, Whitehall comes up with another accounting trick to enable this. I wouldn’t rule anything out at the moment.

Precept and council tax

As part of this cost-cutting exercise, WBC has also been considering what services might be passed down to town and parish councils to perform on whatever basis they can manage. These include things like waste- and dog-bin management, grass cutting, verge clearing, sign cleaning and the operation of facilities such as playgrounds.

Higher-level councils are limited to the amount they can increase council tax by – 4.99%, (with 2% of this going to adult social care if the council has responsibility for this). Towns and parishes, however, have no upper limit set on the increase of their precept: this is what the parent authority pays to them, the amount for that community then finding its way onto a separate line of the respective council tax bills.

If, therefore, you see an increase in this part of your bill, this might be why. The decision may have been taken that extra money needs to be raised to continue services which otherwise be lost and would perhaps be hard to re-start. They may not have the time or money to consult you on this, but then you elect them to make these kind of decisions. We can expect to see this trend continuing in the future.

On the agenda

The full papers for the Executive meeting which will discuss this on 13 May can be seen here. The final budget will then need to be ratified by the Full Council on 27 February. The agenda and papers can be found here from about a week before the meeting.

This is likely to be a fairly feisty occasion – they often are – if a recent statement from the WB Conservatives is anything to go by. “It’s taken the Liberal Democrats just 21 months to bring the Council to the brink of bankruptcy, as they ask the Government for an emergency bailout,” the text begins. It then goes on to highlight some errors of judgement which it claims the new administration has made.

The Conservative group admits that it “does recognise that West Berkshire Council, along with many other local authorities across the UK, finds its budget under pressure from the steep rises in demand for social care services and the consequent costs,” though I think this is rather under-stating the deepening severity of the problem over the last few years.

The party’s statement then goes on to contrast the current dire situation with its summary of its own performance in office. Different views exist on this and I don’t doubt that these will be given a good airing in the two meetings later this month. I

t ends with “a big, open, and comprehensive offer to the Liberal Democrats – we are willing and able to assist and help you deal with the financial turmoil facing West Berkshire to the fullest extent possible – you know where to find us…”

I’ve approached the Minority Group for a comment and will add that in here as soon as it’s available.

Garden waste

One matter I’ve been banging on about for some time concerns the charges for collecting garden-waste bins. The Lib Dem’s 2023 manifesto said it would phase these charges out. I disagreed with this: not only was it a good service that was valued by those who used it but also I felt it was wrong that I should have my garden waste collection subsidised by someone living in a third-floor flat. With over £1m coming in from this, this was going be increasingly difficult line for WBC to hold.

The idea that’s been come up with – which I’m not aware has been tried elsewhere but I might be wrong – is to have the charges graded by council-tax band with those in larger homes paying more. Although the council-tax valuation is another thing that’s well overdue an update, it does at least offer a correlation to property values.

This seems an imaginative solution, as well as an expeditious retreat from a position that was becoming increasingly untenable. It’s estimated that over half of residents will pay less as a result but that the whole reform will none the less raise an extra £120,000 or so.

I know that WBC’s Conservative Leader shares my misgivings about abolishing the charge. It’s therefore to be hoped that he’ll welcome this change of heart in the spirit of co-operation which the last line of his party’s statement (see above) so candidly expressed.

And finally…

None there less, it’s not a great situation: but hardly a surprising one, either. As mentioned above, many councils across the country are facing very similar problems, for very similar reasons and with very similar conclusions.

With further cuts to be found, and these having to come from non-statutory services, it’s by no means certain that further economies will not need to be made as we get into 2025-26. Some areas of future efficiencies have already been ear-marked: but will these be enough?

The only assurance I managed to get from WBC’s Leader Jeff Brooks at a recent online press briefing was that there was no plan to wind the clock back ten years and propose closing all the libraries aside from Newbury’s. Let’s hope that promise can be kept. As for anything else, watch this space.

The real challenge, however, is with costs and services which are outside WBC’s control, both as regards the demand for them and the level to which they must be performed. All it can do is try to provide them as efficiently as possible – and also hope that the government’s increasingly bizarre acts of financial shuffling will keep the wolf from the door until all these things can be sorted out properly.

Then there’s the whole uncertainty of devolution coming up (at which we take a slightly light-hearted look here). This may work out better for any particular council or it may not. Many will not survive in their current form. All of these changes will create a raft of other unknown unknowns. Fasten your seatbelts…

Brian Quinn

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