On 26th February, Stockport Council will set our budget for 2015/16. Like all councils (but unlike most other parts of the public sector) we are legally obliged to set a balanced budget where the money coming in matches the money going out over the year.
Our spending is split into two parts: revenue and capital. Capital is buying the car, revenue is running and maintaining it. The council’s day-to-day spending is nearly all revenue, but bigger one-off items are normally capital.
I cover the investment (capital) spending and other parts of the budget in separate articles.
Here I’m going to talk about revenue – the day-to-day spending.
Revenue spending
Stockport Council will have £235 million to cover our day-to-day running costs for 2015/16.
Where does it come from?
- £135 million is raised from council tax (which the Lib Dems are proposing to freeze once again)
- £43 million comes from business rates (we get to keep 49% of the business rates raised in the borough)
- £39 million comes from the government in the form of the Revenue Support Grant
- £16 million comes from the government’s Public Health Grant.
- …and there are a few other small sources of income to make up the balance
Where does it go to?
- £168 million is spent on what’s called the “cash limit” – that’s the money we have direct control over. All the savings we make come from this money.
- £63 million is spent on the “non-cash limit” – the money we don’t have control over. That includes our levies to Transport for Greater Manchester and the Waste Disposal Authority among others. As we don’t control this part, we can’t make savings from it.
- £4 million goes on other items – also ones we can’t cut back on.
The £168 million “cash limit” – the money we control – is split between different areas of council spending:
- By far the largest part – £63 million – goes to support vulnerable adults, everything from old people’s homes to grants for charities.
- £21 million supports vulnerable children
- £23 million pays for the day-to-day services like bin collections and maintaining roads, pavements, footpaths, street lights, parks and car parks.
- £17 million is spent on public health, including a lot of partnership work with the NHS.
- £7 million is spent on services the council provides to schools (this doesn’t include the money to actually run Stockport’s 100+ schools, which doesn’t appear in these figures).
- £4 million is spent on economic development and regeneration.
- £30 million is spent on back-office support for everything else around the council including all the staff and IT services. This is one of the areas where we’ve already made the biggest savings, with more to come, but the front-line staff can’t function without a good back-office so we have to be careful here.
When people talk about spending cuts to local authorities, it’s the revenue spending they’re talking about. Between 2010 and 2017 we think we’re going to end up taking out nearly £100 million – and when you consider that all comes from our “cash limit” budget, that’s a lot of costs to cut each year.
You can find out more about the budget, and even have a go at setting a council budget yourself with our budget simulator, here.
Can you tell us
1. ”how much” you hold in reserve and investments
2. ”how much” this generates for the benefit of the authority.
3. ”what is the value” of the assets which the council holds on our behalf ie paintings art works and the like.
Hi Keith –
1. Investments and their returns are detailed here: http://democracy.stockport.gov.uk/documents/s59563/201516%20Treasury%20Management%20Strategy%20Annual%20Investment%20Strategy%20And%20Revised%20Minimum%20Revenue%20Provisi.pdf
It’s not the simplest report – because it’s not a simple subject. If I have time I will attempt to include it in a write-up at some point, but the council publishes regular updates.
Reserves I don’t have to hand, again I’ll try and write something up at some point. We have reserves that are allocated against future known expenditure (i.e. “we know we’re going to have to spend this money soon, so let’s put aside something to cover it while we can”) and much lower reserves that are in the “just in case anything goes wrong” pot.
3. Sadly we don’t hold especially valuable works of art. Even if we did and we sold them, we couldn’t legally use the money to prop up our day-to-day spending.
[…] week I took a look at the Council’s day-to-day spending for the coming year. A few years ago the day-to-day spending would have dwarfed our investment […]
Mr Roberts,
Thank you for your reply and the information,
I have looked at the accounts for year 2012/13 and it shows a borrowing of 338 million ( some to the year 2057/58 ) which is being serviced at an average cost of 4.48%.
Investments shown for the same year are nearly 23 million bringing in a revenue at 1.65%.
If the investments were used to reduce the debt it would effectively save £671000.00p per annum at the above rates.
I know this is placing a very simplistic viewpoint and there may be many variables but 671 thousand pounds a year is quite a sum.
Hi Keith, you’re right and that’s exactly what the Council does. Where we can, and it’s prudent to do so, we “borrow” from our own reserves which, as you say, substantially reduces the debt to be repaid over the long term. Of course, those reserves and investments play other roles too, so the treasury team seek the find the right balance.
[…] includes many different parts. The biggest two from our point of view are the council’s day-to-day spending (revenue) and our one-off investments […]
I thought in the big NHS Shake up 2 years ago that Public Health moved over to the council from the PCT.
Hi Arthur – you’re right – the £17million noted above for public health is mostly money (and responsibility) that previously sat with the PCT.