Reasons for Special Circumstances and Urgency Agreed.

Resolved

1.         That the outcome of the Spending Review for local government and the expected impact on the London Borough of Tower Hamlets be noted; and that it also be noted that the detailed allocation of grants to the Authority will be announced by the Government shortly;

2.         That £8m be set aside from contingencies and reserves, as set out at paragraph 6.15 of the report (CAB 064/101), in order to progress measures to implement savings for 2011/12; and

3.         That it be noted that a report will be submitted for Cabinet consideration, at its meeting to be held on 12 January 2011, recommending Cabinet to set a draft budget for 2011/12- 2013/14.

Action by:

CORPORATE DIRECTOR RESOURCES (C. NAYLOR)

Service Head, Corporate Finance, Resources (A. Finch)

Reasons for Special Circumstances and Urgency

The Mayor informed members of the Cabinet that the special circumstances and reasons for urgency associated with the proposals were detailed on the front page of the report. He subsequently Moved and it was Resolved that the special circumstances and reasons for urgency as set out on the front page of the report, and also set out below for ease of reference, be agreed:

“This report provides information to the Cabinet on the outcome of the Government’s Comprehensive Spending Review (“CSR”) and sets out proposals to facilitate delivery of the resulting savings targets in 2011/12, having regard also to medium term financial planning.  The report makes clear that, as expected, local government was particularly affected by the CSR, with significant cuts over the three years 2011/12 to 2013/14.  The cuts proposed for local government are more heavily weighted to 2011/2012, the first year of the cycle, than was expected.  The Government also appears to have abolished or redirected a number of specific grants, in relation to which the position is not yet clear.  In order to make the necessary savings the Council will be required to dismiss staff by reason of redundancy.  The numbers will be such as to necessitate consultation with unions and a notice has been given to this effect pursuant to section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992.  This report was held for as long as possible before being finalised and released in case of a clarifying announcement by the Government on the distribution of Council funding for 2011/12.  No such announcement has yet been made.  As a consequence of prudent delay in bringing forward the report, it was not possible for the report to be published with the agenda.  It is, however, essential that Cabinet consider this report on 1 December 2010, to enable work to progress to deliver savings for the 2011/2012 budget.  This work will in turn be required to enable the statutory consultation with unions to proceed.”

Councillor Choudhury, Cabinet Member for Resources, at the request of the Mayor, in introducing the report:

·                    Commented that:

o                   There had been a collective expression of disgust and anger regarding the “Con-Dem” cuts, which took a sledge hammer to Local Government and targeted the most impoverished parts of the country, such as the east end of London, Birmingham, Liverpool and Manchester all with large populations of poor and vulnerable people, without any regard for the consequences. Tower Hamlets was acknowledged to have high levels of poverty, and the cuts would cause chaos in the Community.

o                   The Mayor and Cabinet must however address the situation faced by the Council and work through the problems presented by the Government cuts. The scale of the problem was great, with a 25% reduction in Government funding having been planned for, but the now apparent reality was a 28% reduction, amounting to approximately £78 million. Additionally the front loading of this saving requirement, with approximately £40 million being required in 2011/12, would drive many efficiency savings more immediately. Also the amount of Area Based Grant available in 2011/12 remained unclear at present, and this comprised a significant proportion of the Authority’s revenue. It was thought that the formula for the allocation of this to authorities across the country would result in a shift of resources away from inner cities to rural and coastal areas. The actual figures arising from the Comprehensive Spending Review announcement in October 2010, expected week beginning 29 November, had yet to be finalised and therefore the 28% reduction in resources for Tower Hamlets may increase still further. Despite the latter the Authority must attempt to plan its Budget in a very short period before presenting it for public scrutiny.

o                   Financial planning had been underway for six months, and Councillor Edgar, former Lead Member Resources, was to be thanked for his hard work in laying a foundation for the Council’s response. The election of Mayor Rahman provided fresh and strong political leadership to steer a course through the current storm. The Council was also blessed with a strong and skilled Officer team who understood the needs of the Community. All would work together to deliver the required efficiency savings in a safe and palatable manner. It was intended that a significant proportion of the savings would be achieved through de-layering levels of management, streamlining back-office functions, reducing unnecessary bureaucracy, improved procurement with service providers providing better value, maximising income collection, improving procedures and optimising the use of ICT.

o                   The Mayor and his Administration would be transparent and accountable moving forward, with effective consultation undertaken with Trades Unions, Community Groups and all Councillors and an all Member seminar on the Authority’s Budget would be held in the near future.

o                   The objective and intention of the Mayor and his Administration was to deliver the required savings, whilst protecting front line services and front line staff; and also to deliver on promises to improve services for both young and old people, to provide housing and improve the public realm, to ensure community safety and improve health.

o                   Key headlines included:

Ø                 A need for the Council to save £3 million per month starting in April 2011.

Ø                 The impact on the Council’s workforce would be managed though processes such as re-deployment, but the reality was that approximately 500 posts would be deleted. After the release of consultants and agency staff and deletion of vacant posts approximately 200 permanent staff would need to take redundancy or early retirement.

Ø                 A key element of the decision being sought of the Mayor and Cabinet, as set out in the report, was the setting aside of £8 million from contingencies and reserves, so that those taking redundancy and early retirement were taken care of.

o                   In conclusion the Mayor and Administration pledged to fight the Government cuts which had the potential to make Tower Hamlets a grim and unrelenting place to live.

·                    Addressed the matters raised by the Overview and Scrutiny Committee, held on 30^th November 2010, in relation to the report:

o                   As set out in the tabled sheet of questions and comments presented by the Chair of the Overview and Scrutiny Committee earlier in the proceedings.

o                   As raised in a question from the Chair of the Overview and Scrutiny Committee during her presentation:

A discussion followed, during which the proposals in the report were endorsed, and which focused on the following points:-

·                    A Labour Group Member, speaking with the consent of the Mayor and Cabinet:

o                   Commented that he opposed the scale of the cuts which were too large, and their pace which was too fast with much of the impact weighted to fall in 2011. This combined to intensify the damage of decisions, regarding public services, which Councils were being required to make; and increase the difficulty of managing these decisions to protect front line services. The decisions would be more damaging than necessary.

o                   Sought and was given clarification/ assurance in relation to:

Ø                 The detail of the proposed deletion of 500 posts including 200 permanent staff, and actions being taken by the Council to mitigate the impact of this on staff.

v             The exact impact was unknown currently and the subject of discussion with the Trades Unions.

v             The figures given regarding post deletions were based on what was currently known about cuts in Tower Hamlets funding (£78millon referred to above), but if the final resources allocated were less this would need to be reviewed.

v             It was intended to drive down on vacancies and agency staff and take a robust approach to redeployment.

Ø                 The medium term financial planning process, resulting allocation of resources to services of the greatest priority and timely implementation of savings to minimise impact on priority services, referred to at paragraph 5.3 of the report, and resulting proposals for organisational change.

v                 There was an overarching “Organisational Change” process which focused on reducing tiers of management, consolidating functions across the directorates, such as Human Resources; and streamlining others such as Communications and Strategy and Policy; with a view to delivering the same or improved services.

Ø                 In the context of Government cuts to specific grants and Area Based Grant, which were acknowledged to have a disproportionate impact on deprived areas such as Tower Hamlets, the stance of the Authority and Administration on this, and also whether a review was underway to think through and determine which services (currently funded by such grants) should be maintained with resources or savings identified elsewhere.

v                 It was intended to drive out efficiencies, take a creative approach to service provision and savings where possible, review priorities and allocate available resources to protect critical services.

o                   Requested that a briefing be sent as a matter of urgency to all members following the announcement of the settlement for each local authority, so all members of the Council were fully informed prior to the setting of the Budget.

The Mayor in Moving the recommendations as set out in the report:-

·                    Thanked Councillor Choudhury, Cabinet Member for Resources, for setting out the context of the difficult times the Authority and his Administration found themselves. It was important to note what he had eloquently emphasised, that the cuts were ideologically driven by the “Con-Dem” Government and would devastate communities across the country, and more was in store.

·                    Commented that:

o                   It was his intention and that of his Cabinet that the Council continued to deliver high performing services, as it had done for many years. They would ensure every effort was made to protect the vulnerable elements of the Community and protect front line services.

o                   All members of the Council’s staff were important to the organisation and his Administration and he intended to work with the Trades Unions to minimise the impact of the cuts on them.

o                   He had recently attended a Budget Congress of the Parnership Board with NHS, Emergency Services, Third Sector Organisations to discuss how they could work together to cushion the effect of the cuts on Tower Hamlets.

o                   Concluded by giving assurance that the current political and officer leadership of the Authority would work together with the Community, staff and any councillors who were interested to minimise the impact on the Community and staff of the devastating cuts from the Coalition Government.

And it was:-

Resolved

1.         That the outcome of the Spending Review for local government and the expected impact on the London Borough of Tower Hamlets be noted; and that it also be noted that the detailed allocation of grants to the Authority will be announced by the Government shortly;

2.         That £8m be set aside from contingencies and reserves, as set out at paragraph 6.15 of the report (CAB 064/101), in order to progress measures to implement savings for 2011/12; and

3.         That it be noted that a report will be submitted for Cabinet consideration, at its meeting to be held on 12 January 2011, recommending Cabinet to set a draft budget for 2011/12- 2013/14.

Reasons for Decisions

These are detailed in paragraph 3.1 of the report (CAB 064/101)

Alternative Options Considered

These are detailed in paragraph 4.1 of the report (CAB 064/101)