Budget Scrutiny, Part Deux

As the Budget Scrutiny exercise reaches its conclusion this coming week, the true extent of the revenue funding shortfall is worth stating publicly. In fact, it is already clear from last month's documents that went to Scrutiny at the start of this part of the budget-setting process.

I already knew the amount we were having taken away from us, as I had calculated it beforehand, using official information and a knowledge of the way the system is fiddled by the Government to subsidise (and, indeed, bail out) the many hugely overspending Labour councils.

I have stated, at the last Council meeting of 2007, that I had worked out that this was some £26 to £28 million pounds, no less. It was gratifying to have that figure confirmed in the report that came to Scrutiny several weeks later.

In that report (snapshot of the relevant table is at the left) the two key figures for the final settlement from central Government were the two deductions. What happens is that the need is calculated via a formula. Now, that tends to come out with the right result, more or less. Then, the Government apply a so-called "relative resource amount" which allows them to rob Peter to pay Paul, as the old saying has it.

This is considered by the Government to be necessary because (perhaps not all that surprisingly) there just isn't enough money to pay all the actual council needs throughout the country, including the huge excesses needed to get lots of Labour-run councils out of the holes they have dug for themselves. In most such cases, it appears that they don't stop digging because they know they will be bailed out, year after year, as long as there is a Labour government at Westminster. Thus there is no incentive to mend their ways, and the same situation occurs every year, without fail, and we and other properly-run (non-Labour) councils are penalised.

Here in Medway, the Relative Resource Amount for 2008-2009 is therefore a deduction of no less than a whopping £22,194,000.

Is this the end of the story? No: there is a second fiddle factor involved, also a deduction in Medway's case. That is the infamous "floor damping", which has now been increased to £5,396,000. Add these two figures together and guess what? Yes, almost £28 million is being taken away from the amount that the Government's own formula clearly states Medway needs -- not wants, needs! It is personally gratifying to me to find that my own result (arrived at via a different approach) is almost identical to the outcome of the above calculation. This is nearly always a solid endorsement of one's own stance, when an independent assessment arrives at virtually the same conclusion via a different route.

Thus we can now all know exactly why the situation here is so very difficult, even with our lean and efficient council operation, which has again been praised by independent auditors just this past week. Even so, by applying some tough measures, the budget deficit as of now is only a few million pounds (only, he says!) and this will have to be eliminated by the end of this month, as it is illegal to set an unbalanced budget.

The budget we do set at that time will definitely be more robust than in previous years, as such innovations as the new three-year settlement have made it possible to plan better and to eliminate the (admittedly very few) uncertainties in, say, the current year's budget. All of this will be a truly remarkable achievement under almost impossible conditions.

Who said miracles never happen?