Written evidence submitted by Plymouth City Council [SRF 027]

 

 


 

  1. Summary

Plymouth City Council welcomes the opportunity to submit a response to The Housing, Communities and Local Government Committee inquiry into the spending review and local government finance.

For many years, like all other Local Authorities (LAs), Plymouth has been having to work harder and faster to keep up with service demand in the context of reducing funding and resources leading to significant financial pressures. This has obviously been brought into sharper focus by the impact of the Covid-19 response. However we have a range of proposals that we hope will help to shape future policy and funding allocations, and which in the long term will create efficiencies and savings for both central and local government.

As the starting point there absolutely needs to be to a re-think of public finances with a multi-year financial settlement. This would provide greater certainty over medium-term finances, sufficient resources to tackle day-to-day pressures, as well as the lasting impact of Covid-19 on income and costs.

Policy and decisions will continue to be made at a national level which will not necessarily favour individual regions or cities, depending on the stage of the pandemic. This is at the forefront of our submission, to ensure that this call for evidence addresses the needs of local areas and cities such as Plymouth, so that the government ensures fairness, and genuinely delivers the ‘levelling-up’ it has committed to.

In summary we ask government to:

 

 


  1. Council Finances and impact of Covid-19

After 10 years of austerity, Plymouth City Council has lost in total £114 million in Revenue Support Grant. The organisation has worked hard to adapt to the reducing budget envelope, implementing a comprehensive set of savings plans. However, the impact of the Covid-19 lockdown, and ongoing control measures to mitigate the spread of the virus have now profoundly changed the Council’s financial projections. Some examples of the “scarring” impact from Covid that need addressing include;

Despite central government grants, the Council faces significant financial challenges with additional costs incurred and the loss of income from Business rates, Council Tax, commercial income and fees and charges.

The dependence on Council Tax income streams should be examined. There is an inherent unfairness in the system. Some areas are less able to raise additional income from increases in Council Tax if there are a greater proportion of lower band properties. In Plymouth, 85.8 per cent of homes are Band C and below. This means that the Council is only able to raise £3 million per annum through Council Tax (assuming a maximum rise below 3 per cent). Coupled with the high levels of deprivation in the city and the inability of many householders to withstand Council Tax rises, reliance on this income stream to fund council services is not sustainable. 

An important factor in estimating future council tax income for 2021/22 is the expected increase in the number of CTS claimants and its impact on tax base and therefore the amount of council tax collected. To date the number of claimants has increased by 2,366 since the previous year to 15,436.  This is will result in approximately £1.9m reduction in council tax income for Plymouth. We hope that the Chancellor’s announcement of 25 November 2020 will go some way towards alleviating this.

In addition, the council tax collection rate has fallen in the current year due to the impact of Covid-19. Plymouth is reviewing the expected collection rate for next year. It is essential the longer term impact of a reduction in the tax base and increased numbers claiming council tax support are fully funded by the government.

Business Rates are the second largest source of revenue income. Plymouth City Council is the lead administrator for the Devon-wide Business Rates Pool (DBRP) and has seen resources retained within Devon due to this partnership approach. 

The local economy has a significant impact upon the tax base for business rates and has inevitably been affected by Covid-19. Plymouth has been assessing the impact on the tax base using the VIA rating list. At this stage of our planning a number of assumptions have been made to different rating categories. Overall we expect:

Taking into account all of these assumptions business rate income will decrease in 2021/22.

The government has announced the losses within the Collection Fund, used to account for the income received from council tax and business rates, can be managed over a three year period.  Plymouth is expected to declare a deficit in 2020/21. We recognise this will mean the full impact of losses will not impact upon us immediately, however this is only delaying the problem and Plymouth asks that all losses are fully funded as part of future local government finance settlements.

In addition, Plymouth City Council would like the Government’s assurance that the full financial effects of Covid-19 on future years is not overlooked and all legacy issues are fully funded and considered. Specifically:

We would ask that the government provide a three year sustainable funding model, which fully addresses the cost pressures on vital services and gives councils the ability to plan strategically with certainty.

Plymouth has offered to work with the MHCLG in a Fair funding review, as a pilot. We would ask the government to take up this offer and to also provide modelling data as soon as possible to enable this.

 

  1. Health and Adult Social Care

Adult Social Care

Plymouth City Council supports the ADASS calls for at least a two-year funding settlement with immediate effect; a consultation programme over the next two years that is cross-government which includes extensive public and cross-party engagement, and which works nationally, regionally and locally to build the care and support that people want now, and over the next 10 – 20 years.

Locally, approximately 45 per cent of Plymouth City Council’s budget is spent on Adult Services, with over 70 per cent of the budget covering adults, children or families who need more support. Growth in cost and demand was already predicted to incrementally increase by circa £5 million per annum, from 2020/21 due to demographic and national living wage pressures and an estimated further cost requirement of £6.2m for Infection Control has been forecast in 2021/22.

In addition Covid-19 has shown the additional costs needed in the short term around PPE and Infection Control, but crucially the need to invest longer term in the workforce, markets and in innovation. Key areas that we believe the Government should address are:

There is a strong economic and social case for investing in social care. Investment in care will create jobs, promote new technologies and contribute to the Build back, build better’ policy agenda.  

Public Health

Plymouth City Council is calling on government to address the unfair allocation of public health funding.

Since April 2013, public health services in Plymouth have been underfunded by approximately £3 million per year, which equates to a 21.9 per cent funding reduction (£13 per capita per year). This continued under-funding has resulted in Plymouth being unable to address growing health inequalities, leading to poorer outcomes, lower life expectancy, reduced economic productivity and escalating demand on health and care services. With more than 76,627 Plymouth city residents living in the country’s 20 per cent most deprived areas (IMD 2019), Plymouth’s needs are well documented and accepted. These funding issues could be addressed if:

In addition Plymouth had to fund the provision of a Temporary Mortuary arising from the pandemic:  Plymouth will continue to lobby Government that this should be funded separately from the general grants allocated.

 

  1. Children’s Social Care

We echo the LGA and ADCS response in relation to the increasing pressures on Children’s Social Care Services (CSC). Pre-Covid-19, Plymouth was coming under increasing pressure to make efficiencies within the system, and this has been heightened by the Pandemic. It has never been so urgent that Government provides appropriate and long-term funding to meet the national and local evidence, which shows the rising cost of caring for Children and Young People.

Covid 19 has had a direct impact upon the cost of young people’s placements due to the high levels of demand from our neighbouring local authorities and nationally and upon our looked-after children placements. From April to September 2020 there has been an increase of 43 new Looked After Children placements equating to a full year effect of £2.593m. Using trend analysis, an increase of +16 placements bimonthly is forecast.  This will increase costs by year end by £0.853m if realised.

Given the volatility of Children’s Social Care, where one child in one placement can have a major budget impact, we are requesting due consideration is also given to allowing additional funding mechanisms such as permitting Councils to capitalise their exceptional Children’s Social Care costs. This mechanism would only apply to the exceptional cases, where for example a child needs 24/7 care and would be subject to an application to MHCLG with relevant support information.

Plymouth’s Children’s Social Care services truly believe that innovation is key to the prevention agenda and delivery of efficient and effective services for children. We would like to see new and improved routes for more local authorities to access grant funding in order to support innovation and the development of Children’s Social Care Services. We need to see policy change within government that supports LAs to innovate in areas linked to clear and positive outcomes for children, such as developing approaches that directly reduce the number of children needing local authority care, including residential care so that government and councils start to see a reduction in costs and reduced financial pressures over time.

 

  1. Education and Early Years

Government funding needs to enable a rapid improvement of local schools to achieve better outcomes for pupils. The current ‘dual’ system of academies and maintained schools does not appear to be underpinned by clear policy objectives. Funding has been removed from councils, but the overarching coordination of good provision remains a local responsibility, as has been illustrated during Covid-19.

For the school system to improve, councils need to be seen as a strategic partner and be part of the conversation – there needs to be a clear message that all schools must be accountable and collectively own the improvement agenda. The funding that is given for bespoke programmes, coordinated by councils, should be considered within this review, with a duty placed on councils to commission work, which could be delivered by the LA alongside schools, the Regional Schools’ Commission and Teaching School Councils. If the policy and governance were in place - this would remove duplication of funding and increase accountability across the system.

With funding being removed, but responsibility for place planning and admissions remaining with local councils, there is an overwhelming argument for councils to have the ability to expand the school estate. We ask government to give councils the powers to open new maintained schools, where this is required.

 

Sustainable funding agreements for Maintained nursery Schools

Maintained Nursery Schools (MNS) offer an exceptionally high standard of education. They support disproportionately high numbers of disadvantaged children and those with special educational needs and disabilities (SEND). MNS cost more to run than other settings due to additional statutory responsibilities, but their protected funding comes to an end in 2020/21. Therefore it is imperative that this Government looks to provide sustainable funding agreements for MNS and reviews the funding for the Early Years sector as a whole.

 

Local Authority legacy pension costs which were previously funded via the ESG general fund grant.

The issue of Local Authority legacy pension costs which were previously funded via the ESG general fund grant needs addressing. Plymouth’s maintained schools were not in a position to fund this Central Government cut in grant which would reduce some maintained schools budgets by as much as £30k. In addition, it is not possible to secure agreement from maintained schools to fund this gap as the majority of the funding is used to pay for a £1.4m pension legacy cost, the majority of which, relates to schools who have since converted to academies. This leaves a significant pressure within Plymouth’s revenue budget in pension legacy costs (for maintained schools and academies) with no means of funding.

We’d ask government to address the issue of Local Authority legacy pension costs which were previously funded via the ESG general fund grant.

 

  1. Planning, Housing and Homelessness

Planning

We remain of the view that planning fees should be decentralised to local councils. We believe Plymouth needs to be supported and properly resourced to make locally led planning decisions and that fees should also help to cover the cost of wider planning functions to ensure that these can continue to support the decision and plan making process. 

If the proposals set out in the Planning White Paper go ahead, we would expect that Government makes commensurate provision for Planning services to be underpinned by the appropriate support, with a clear resource plan linked to every proposal set out in the White Paper.

 

Housing Delivery

Plymouth City Council welcome the recent announcement of the £12 billion extension to the Affordable Homes Programme by Homes England. We would ask that there is greater recognition of increased grant levels per home to maximise the number of viable schemes and that a focus is retained on supporting the delivery of truly affordable homes such as socially rented homes.

We also welcome the recently announced One Public Estate Phase 8 funding including land release funding to help identify future public sector land opportunities and help unlock sites for new homes and we will be engaging fully with MHCLG on this.

We need Government to make provision for a longer-term, streamlined and flexible local funding approach that is more efficient and responsive to local challenges and aligns with the soon to be announced Single Housing Infrastructure Fund. Also aligning the investment programmes of agencies such as Highways England, Network Rail and Department for Transport (DfT) to the growth agenda would be a significant benefit.

The Government needs to consider how proper estate regeneration and brownfield development is funded. This requires bespoke funding solutions and dedicated funding streams due to associated costs and the viability gap.

Homelessness

Plymouth City Council recognises the complex factors that are contributing to the increased demand for homeless support. The introduction of the Homeless Reduction Act (HRA) for example, has increased the number of people who are eligible for services. During 2019/20 we provided advice to 2,404 households who were homeless or threatened with homelessness, an increase of 29 per cent since the introduction of the HRA.

We appreciate the additional funding of £381,780 from The Next Steps Accommodation Programme. However, this funding alone does not go far enough to address some of the systemic issues surrounding homelessness policy. Bed and Breakfast numbers continue to increase due to Covid19 with payments to our partner provider increasing due to demand for services.

All funding directed towards housing/homelessness require longer lead times and delivery windows which would be far more effective as this would further support the whole system approach towards preventing and tackling homelessness. We ask that Government address the various funding streams, bringing them together to streamline funding for homelessness.

 

 

 

  1. climate emergency

Given the government’s priority to address the Climate Emergency and to become carbon neutral by 2050, LAs have a significant role to play in helping government achieve this ambition. Whilst there is already scope for LAs to use existing powers to influence carbon emissions in their localities, with the right powers, responsibilities and resources they can play a pivotal role in driving the changes needed to rise to the challenge.

Plymouth has set out its intention to become carbon neutral by 2030. Given the significance of this agenda LAs should be fully resourced through this funding review to enable them to deliver significant change on this agenda.

For places like Plymouth who have an ambition to go further, faster, we would welcome the opportunity to become a pilot area for trialling new approaches.

 

November 2020