Written evidence submitted by Derbyshire County Council [SRF 032]

Background

Derbyshire County Council is an upper-tier local authority for the county of Derbyshire, comprising 64 councillors, which is controlled by the Conservative Party having gained control in the 2017 local elections.   

Derbyshire is a largely rural county with many sparsely populated areas alongside larger built-up urban conurbations.  The population of the county is expected to increase by 13% by 2043.  Population growth varies across the county ranging from just 5.2% in Derbyshire Dales to 30.1% in South Derbyshire

There are 28 market towns which play a significant role in the local economy.

Derbyshire is home to over 29,000 businesses that employ around 295,600 people. Together they contribute £15.4 billion in economic output to the UK’s economy. The county has a strong resilient business base, demonstrated by the area’s good business survival rates, where almost a half of all businesses that start up survive at least 5 years. The county also has higher than average levels of employment.  In September 2019 the Derbyshire employment rate stood at 78% higher than the England rate of 76%.

The rising cost of living including food and fuel means that some communities in Derbyshire experience higher than average levels of deprivation and poverty. The Index of Multiple Deprivation (IMD) is the most commonly used measure of deprivation and the 2019 index shows there are 22 out of 491 small areas in Derbyshire that fall within the most 10% deprived areas across England. Most of these areas are located in the North East of the county in the former coalfields areas.

Approach to local government funding as part of the 2020 Spending Review

The local government sector will be disappointed with the confirmation by the Chancellor that there will be a one-year Spending Review.  The Council has long argued the case for certainty in the levels of funding allocated as this helps to support medium-term financial planning.  Multi-year settlements are important in determining the long-term sustainability of the services provided by local authorities. 

The multi-year settlement offered by Government in 2015 for the period 2016-17 to 2019-20 provided greater funding certainty across the spending period and was accepted by 97% of local authorities. 

The 2019 Spending Review provided the short-term certainty and stability that was required with a funding package of £3.5bn for vital council services.  Authorities were provided with the largest real-terms increase in spending power for local government in a decade, helping to meet the rising costs and demand pressures faced this financial year.  The £1bn funding package to support both adults and children’s social care was welcomed as was the commitment from Government in confirming that this would be paid each year until the end of the current parliament.  However, this comes on the back of a decade of austerity for local government and rising cost pressures, particularly in respect of social care.  The Council, at the very least, expects this level of funding to continue into 2021/22.   

Recovery is now a vital phase in responding to the Covid-19 pandemic.  This Council, along with other local authorities requires cohesive working with partners at the local level and local authorities are best placed to do this. 

Last year the Government stated it was the intention to “level up across Britain” and the Spending Review launched in July 2020 committed to “levelling up economic opportunity across all nations and regions of the country”.  Therefore, the Council expect to see significant financial commitment to the region in support of these statements. 

The Council agrees with recent comments made by the LGA in that the Government must place inclusiveness at the core of its recovery strategy.  Local authorities should be given the powers and resources to shape more inclusive local economies. 

The Council considers that the threshold for Council Tax increases should be decided by local councillors and therefore the current referendum limits should be rescinded.  The local electorate will hold local authorities to account through the ballot box. 

It is of note that in 2018, the Government made a commitment to publish the provisional local government finance settlement on or around the 5 December each yar, with the final settlement produced by 31 January.  It is imperative that the Government abides by its commitment to support the budget setting process.  Section 151 Officers have had the added uncertainty of Covid-19 costs to manage during the current financial year and the impact this may have into the next financial year.  A delayed settlement will only exacerbate what is already a difficult time for officers and Members involved in budget preparation.  

The current financial situation of councils, how this has affected their ability to deliver services and the demand for services, including Adult Social Care.

At the start of the current calendar year, Local Government Association research highlighted that the number of children in care had risen by 28% in the past decade.  The national picture is being reflected in Derbyshire, with substantial strain placed on the children’s social care budget.  There were overspends in the children’s social care budgets in each of the four years from 2016-17 and it is currently forecast to overspend in 2020-21, despite local investment in the service. Increased demand for services in Derbyshire is highlighted below:

The Comprehensive Spending Review 2015 announced that £1.5bn would be added to the ring-fenced Better Care Fund progressively from 2017-18.  This was later increased to £2bn in the Spring Budget 2017 allocated over a three-year period.  For 2020-21, funding has been maintained at 2019-20 levels incorporating £240m which was allocated as Winter Pressures Grant in 2019-20.  An additional £410m Social Care Support Grant was also made available in 2019-20 to support both adult and children’s social care. 

The Spending Round 2019 announced further grant funding for social care in 2020/21, this being an additional £1bn grant for adult and children’s social care. This is in addition to the rolling over of existing social care grants of £2.5bn into the 2020/21 financial year. The £2.5bn will be made up as follows: 

It is imperative that this level of funding for social care continues over the medium to support the financial sustainability of social care services.  Without this level of funding, services will be at breaking point.  The Council has adopted innovative solutions to the delivery of adult social care services across the county which will realise significant savings over the medium-term.  However, the advent of Covid-19 has resulted in delays to the programme.  Even with the planned level of savings being achieved, there is still rising demand for services and the cost of increased independent sector care fees alone is estimated to cost the Council between £10m - £13m per annum over the medium term, in addition to annual costs of £4m per annum for estimated rising demand costs.

The option of implementing the Adult Social Care Precept has provided local authorities with much needed additional Council Tax income to support the funding of associated services.  The Council is committed to keeping low Council Tax increases and whilst we recognise that increases in Council Tax bills for many during rising unemployment will be difficult, local authorities should once again be afforded the option of implementing the Precept. 

What the financial challenges facing councils are as a result of the COVID-19 pandemic, including lost income and local tax losses.

The Council, like all local authorities, has incurred additional costs as a result of the pandemic.  The grant income received to date from Government to meet the costs of Covid-19 to date is welcome, as well as the sales, fees and charges income compensation scheme.  However, the Council’s estimates for the current financial year project that costs, loss of income and slippage of savings schemes will far outweigh the grant income received to date.  Whilst the Council has robust plans for a second wave of the pandemic, it is likely to give rise to additional costs, over and above those currently estimated. 

It is vital that local authorities are given the appropriate funding to ensure that they continue to support communities, the local economy and the care and health sector throughout the duration of the pandemic.  The Council coordinated a colossal community response across the county to make sure vulnerable residents were supported throughout the outbreak.  Our Community Response Unit was quickly established working with volunteer groups and local communities. 

The Council is seeking assurance that the Government will fund all costs to local authorities which have been incurred to date and throughout the course of the pandemic to guarantee that we continue to support communities and the local economy during this difficult time.  Without the funding support, the Council will be forced to take draconian measures such as significant cuts to services or the issue of a Section 114 Notice.  Local government has been an exemplar in responding to austerity measures imposed upon it but finding new ways of working and being innovative in the services it delivers.  The Council has realised savings of £300m since 2010 and continues to ensure that value for money is at the heart of all its services.  However, we are concerned that insufficient funding and the prospect of cuts to funding in future years to mitigate the costs of Covid-19 will have a detrimental effect on service delivery. 

Local government will need funding to support current and future costs as new challenges emerge.  The Council is clearly focused on what is required to ensure that it recovers as a county from the pandemic, balanced with rising demand for our services, particular in respect of social care. 

The Council welcomes the Government’s decision to spread Council Tax and Business Rates Collection Fund losses over a three-year period, but the ideal would be for the Government to fund those losses to ensure that local authorities have the funding available to deliver vital services. 

A commitment to the “levelling up” agenda is needed from Government.  Therefore, the Council expect to see significant financial funding to the region in support of these statements.  The Council would welcome additional funding from Government to stimulate the economy.  Local authorities need a range of levers to support economic recovery. 

 

What the impact is of another one-year spending review and a further delay to a multi-year settlement and the Fair Funding Review.

Earlier in this document, I outlined the detriment of a one-year spending review.  It hinders medium-term financial planning and does not provide the funding certainty needed to ensure that local authorities can continue to set a balanced budget.  Without a multi-year settlement, local authorities may have to make decisions which require reductions in spending and cessation of discretionary services.  A multi-year settlement provides for meaningful decisions to be made to support financial sustainability.

Having a multi-year settlement is justified as recovery is now a vital phase in responding to the pandemic.  Local authorities along with its partners will be the key drivers of local economic growth.  We need to plan and shape our economic strategies which is difficult when presented with a one-year settlement. 

The Fair Funding Review commenced in December 2016 with a commitment from Government to review the needs assessment formula in the light of the change to funding local authorities through local resources rather than central government grant.  Despite a number of consultation documents issued by Government since that time, the Review has continued to be delayed.  The financial year 2021/22 was meant to see the move to a 75% business rates retention.  This has now been postponed with no clear direction or revised timeframes from Government. 

Summary

Local authorities have risen the challenge of austerity during the last decade and the Council has stepped up to that challenge with its Enterprising Council approach.  We continue to review the way we deliver our services ensuring residents receive value for money in the services which are provided to them.  To ensure an effective response to the recovery from Covid-19 requires significant investment in the local infrastructure to strengthen our local economy, coupled with continued and increased financial support to address rising demand for social care services. 

The Council would welcome a multi-year financial settlement to aid medium-term financial planning.  A renewed commitment and timeframe for implementation of the Fair Funding Review is needed to ensure that the historic resource equalisation flaws in the current funding methodology are addressed.        

 

November 2020