Council Face a Funding Shortfall of £6.5 million – Executive Agrees Countermeasures

Published on: 3 Sep, 2014
Updated on: 8 Sep, 2014

A plan to tackle a projected £6.5 million shortfall in Guildford Borough Council’s budget for 2015-2019, was approved at last night’s Executive meeting (September 2).

The remedial plan is said to be based on better use of property assets, and a revised investment strategy.

Cllr Nigel Manning deputy leader of the Executive and lead councillor for finance.

Cllr Nigel Manning, lead councillor for finance and asset management, said: “We are facing a funding shortfall, and to help address this we need to ensure that our asset investments continue to support our strategic priorities.

“We own a variety of properties and extra investment will increase our income as well as support and encourage business growth in our borough.”

In a press release issued by the council it was stated: “Our corporate plan sets out a number of priorities and an extensive programme of service improvements and investments, including:

• supporting new businesses to stimulate growth and employment opportunities
• securing investment in the town to improve retail and heritage
• working with partners to regenerate key sites in Guildford town centre and Slyfield areas
• supporting employment and enterprise opportunities
• ensuring that we have an effective and robust property portfolio
• increasing total income from commercial services.

“Our updated budget projections show that for the four financial years 2015-2019 we are facing a budget shortfall of £6.5m, partially as a result of a 30% reduction in government grant.”

To help bridge the gap in funding the council aims to undergo a programme of changes to invest in its property assets in order to support strategic priorities. Increasing investment in property within the borough will, it is hoped, increase income generated as well as encouraging business growth and sustainable development.

The Executive agreed to the investment of £25.7m to increase the council’s assets which is expected to increase annual income by £1.2 million through extra rental income.

Cllr Stephen Mansbridge, leader of the council, said: “It is important that we look to the future and act now to ensure that our assets can be used effectively.

“Investing wisely now and in years to come will increase council income and local opportunity. It will also allow us to regenerate more key sites to ensure businesses stay here and move here, as well as making sure our borough is an attractive place to work and live.”

Responses to Council Face a Funding Shortfall of £6.5 million – Executive Agrees Countermeasures

Jules Cranwell Reply

September 3, 2014 at 9:44 pm

Why not sell out the greenbelt to rapacious developers, and bank the CIL [Community Infrastructure Levy] payments? That should about do it.

Oh, sorry, someone has already thought of that.

So what’s next?
Martin Elliott Reply

September 4, 2014 at 12:02 pm

So Guildford Borough Council, a multifunction service business, has an annual expenditure of c. £43 million. It annually has a reasonably transparent budget cycle to predict this and its revenue stream.

Less than six months into the financial year its already projecting a 15 per cent overspend. This is being blamed on the holding company, even though their revenue support is also predicted year on year.

If this was a plc there would be pretty serious questions for the directors. We, the residents will probably have to wait almost a year to demonstrate our feelings on their management competency.
- Sue Sturgeon Reply
  
  September 9, 2014 at 3:50 pm
  
  Martin Elliott’s comments are factually incorrect.
  
  The £43million figure quoted as ‘annual expenditure’ is our net budget, the Council’s gross expenditure budget for 2014/15 is £138million. The £6.5million is our projected future budget shortfall for the financial years 2015/16 to 2018/19 and not an over spend for the current financial year (2014/15).
  
  We have been provided with an indicative revenue support grant (RSG) settlement from central government that shows a 30% decrease in our RSG grant between 2014/15 and 2015/16 and we have assumed further cuts in future years. The fact that we are projecting our financial position into the future and making plans to address any shortfall represents good, robust financial management and planning, a crucial tool in the governance of any organisation.
  
  In their Annual Audit Letter presented to the Audit and Corporate Governance Committee in November 2013, our external auditors, Grant Thornton, made the following comments:
  “Our work highlighted that the council has adequate arrangements to secure financial resilience:
  • key financial indicators show a good track record of achieving budgets, with a healthy level of reserves to provide investment for future developments and offset unforeseen costs in the future
  • the medium term financial strategy reflects the council’s corporate priorities and reflects realistic assumptions about factors impacting on the budget.”
  
  Sue Sturgeon is the managing director and chief financial officer at Guildford Borough Council
  - Martin Elliott Reply
    
    September 12, 2014 at 1:06 pm
    
    I am grateful to Sue Sturgeon for correcting my figures. Obviously if the GBC reports to residents and announcements were a bit clearer I would have stood a chance in getting the correct interpretation.
    
    It still seems that either the officers or the council are choosing to assume the reduction of central government funding and are reacting by growing the budget against the expressed wishes of the government.
Jim Allen Reply

September 9, 2014 at 7:59 pm

Looks like ‘The Dragon’ is getting the message through to the people who don’t appear to be listening to the salary suppliers.
Jules Cranwell Reply

September 12, 2014 at 11:18 am

Ms Sturgeon’s response still does not explain why the council has come up with the unproven and highly risky strategy of investing £25.7 million in commercial property. And this at a time where the executive has reduced to an inner circle of three that have a vote on such investments.

The council is there to provide a public service, not as property speculators. Have they learned nothing from the previous commercial property crash? where many institutions, including the Church of England, have lost their collective shirts?

The council has a duty to consult council tax payers, before risking their money. They should do so.