The end of the new administration
Labour has passed its first Medway Council budget. What's next?
Medway Labour has passed its first-ever budget for Medway Council. After 25 years of Medway unitary authority, Medway Council Leader Cllr Vince Maple is clear about what this means: “This is the end of us being a new administration.”
They are now the administration. They have set out their programme for the next 12 months and beyond towards 2027, when they will attempt to convince the electorate for a second term.
Sitting down with Cllr Maple, it’s no secret that it's been a difficult financial situation, with severe cuts in the revenue support grant received from the government since 2010, the depletion of council reserves largely inherited from the Rochester-Upon-Medway City Council, and a population suffering from a ‘the cost-of-living crisis’, or poverty as it used to be known commonly. On top of this, the council has been forced out of their Gun Wharf headquarters due to RAAC concrete, a metaphor that is a little too on the nose, leaving them with an extra £20 price tag for repair.
“It’s about political priorities. This government has wasted billions of pounds. Nobody in local government is calling out for unlimited cash and pots of gold.”
The administration has repeatedly found itself in conflict with Levelling Up Secretary Michael Gove and his department. First, it lost £170m of Housing Infrastructure Funding, then was threatened with losing control of the Local Plan. Ironically, the council needed Gove’s support to pass this budget. He first refused approval to increase council tax past the limit of 4.994% to 9.994%, so their last roll of the dice sought permission to break the law by borrowing money to cover day-to-day running costs. It is illegal to pass a budget using this method without consent from the government.
“The fact of government giving us that exceptional financial support, which is the most bizarre name for the process, because there's no extra or exceptional financial support. It's just some flexibility, effectively the ability to borrow, both to pay some of the day-to-day bills for the next couple of years, but also give us some financial headroom to do those things which will make us more financially sustainable and give better services to residents.”
Despite Gove’s insistence that we have had enough of experts, the council called in the Chartered Institute of Public Finance and Accountancy (CIPFA). Cllr Maple says he found the report painful reading at times but chose to publish it in the spirit of openness and transparency. CIPFA were explicit that without government intervention, a budget could not have been set. Determined not to issue a Section 114 that effectively declares bankruptcy, the exceptional financial support finally granted enables them to work towards sustainability. Still, it will take longer than if they had been able to increase council tax.
“We've had to ask for that flexibility. We're one of 19 councils. All types of councils, all political persuasions. This is not a Medway issue. I wouldn't be surprised if we see that flexibility being built in. But we need to see more. And look, we've got a General Election happening, there will be a new government I want that new government to give local government funding based on need. We need a level of flexibility we don't currently have and importantly we need a multi-year settlement being able to plan means we need to know what's coming down the track.”
Of the 19 councils, including Medway, that have requested this support this year, with one or two exceptions, they are being run in a reasonable way. They just don't have the money to deal with four challenging areas: adult social care, children's services, special educational needs and disabilities, and temporary accommodation.
A frequent tool when discussing governmental budgets is to compare them to household budgets, with lines like ‘maxing out the credit card’ despite how often we are told this is not a good analogy to make. That being said, if a resident came to Cllr Maple and said they were planning on taking out a £10,000 loan to pay their household bills, would that be a good decision to make?
“I'd say two things. I understand completely why residents ask, ‘How can we borrow £16m to do stuff but spend £20m on your headquarters? How do those two things work out?’ The £16m is revenue, our day-to-day spending, The £20m is effectively, to use the household finance analogy, that's a mortgage.”
And the resident who is looking to pay their bills?
“If someone was to say to me, ‘I want to borrow £10,000 because my electric bill is too high, I need to pay my electric bill, but also fit a solar panel as well and bring my electric bill down’, that is broadly what we are doing.”
Servicing the debts will be an increasing part of the initial budget starting point for Medway's expenditures. There aren’t a huge number of debts, in part because the council has only existed for 25 years, though there was some relatively minor inherited debt from Kent County Council.
“The deal from government has been the PWLB interest rate plus 1% on top. That's quite punitive, and in my response back to Simon Haw, the minister who wrote to me to confirm this was in the case, I said, actually, one of the things I want you to consider is whether that punitive additional 1% on top is fair.”
The council has previously balanced the budget by using the aforementioned reserves. With reserves now under the recommended minimum of £10m, that is no longer an option. With the path to financial stability looking tough, the possibility of a surplus to build back those reserves is less likely.
“This is purely about the income we have, the pressures we have, and there hasn't been enough positive change to improve service and reduce cost, and that's what we need to do. We need to deliver that quickly because the pressures of that additional flexibility will cost taxpayers money. However bad you think the decisions we've made are, and I accept that entirely, I don't want to see the end of free swimming. I don't want to see the end of the visitor information centre. I don't want to see parking charges put onto our country parks, but those are choices we have to take to try and get to a point of having that financial sustainability.”
Maple accepts that some of these decisions are about generating more income and balancing the available resources. It wasn’t possible, for example, to borrow more to keep free swimming, as this is a loan that will need to be paid back.
“All we've done is effectively kick the can down the road for a year. The previous administration failed to look at this in any real depth. The CIPFA report, and these are not my words, states difficult political decisions were not taken.”
A cynical undercurrent suggests the previous administration expected Labour to win, leaving them to fix the situation. Similar accusations are currently being thrown at the national government. Maple doesn’t accept that, putting the blame more on the style of working within the last administration.
He argues that the administration is pushing forward with a new way of working, with the cabinet and senior management team working collaboratively, claiming that previously silos felt almost compulsory.
“To read in Local Authority that the former leader of the council cut more than half a million pounds from adult social care without talking to the portfolio holder, I just found that astonishing, and not good astonishing.”
One of the actions that the administration is in the process of introducing is red routes, with some arguing that these are a money-making scheme. Cllr Maple refutes this, stating that they are a traffic management system, along with school streets. Whilst the administration takes air quality and safety seriously, he is keen to reiterate that ultra-low emission zones (ULEZ) are not coming to Medway. The focus is on street safety.
“Red routes is a part of that and I hope in one sense that we take almost zero income because actually I want roads to be moving more quickly. I want the air to be cleaner.”
Another action was the cancellation of champagne socialism on the roof of the Pentagon. Cllr Maple is clear that he never agreed with the plan to start with, preferring that if there was a bar on top of Mountbatten House it served Vimto, his drink of choice.
“Seriously, I think this is about vision and ambition for Medway, but it's about the right thing in the right place. If anyone was really looking forward to champagne bars on top of Mountbatten House, we're taking a different approach. Importantly, one of the reasons for that is a more environmentally friendly roof.”
The budget affected the Innovation Park project, which has been ‘paused’. While the council wants high Gross Value Added (GVA) jobs, is Innovation Park the best way to encourage growth? Maple is direct:
“£11m of external money and not a single business signed up. Something's not right.”
The review will be a collaborative approach between Cllrs Curry, Edwards, and Khan, to decide what to do with the land. Maple is keen to highlight the good working relationship between the council and BAE systems, the park’s neighbours, and one of the biggest private sector employers in Medway.
Maple stresses the importance of working with HR professionals, trade unions and the Employment Matters committee when it comes to staff pay as part of his mission to make the council an employer of choice. When you consider the issues of inflation and cost of living, how sustainable is it not to raise the Leader’s Special Responsibility Allowance?
“I was really proud that our administration took the decision to not increase SRAs at a time that other places did. The previous administration chose to, KCC (Kent County Council) chose to, we chose not to. That was the right decision, not because of political grandstanding, but actually if we're taking tough decisions on services that people really value, even though the report, very generously says the Leader, aka me at the moment, my SRA is dramatically under where it should be. That makes me feel warm inside, but actually at the moment the worst possible thing would be to put up SRAs, because again, that's money that should be in the front line.”