Balancing the books

OK, so hands up how many people know what the FSS is? Any takers? Of course not. How about the Standard Spending Assessment or even the Revenue Support Grant?

It's a fair bet that 99.9 per cent of people do not know how their council tax is calculated. But the bare facts speak for themselves. Council tax rates in Southampton are due to rise by about 19 per cent from this April - or nearly a fifth if you prefer.

With inflation bubbling along at under three per cent, it is understandable that many people remain baffled why, when the bills drop through their letter boxes on April 1, they will be faced with such inflation-busting council tax demands.

But wait a minute. Neighbouring local authorities are also facing huge council tax rises. Hampshire County Council's Cabinet has already agreed a 15 per cent increase in council tax.

And Isle of Wight residents were looking at a massive 17.8 per cent rise until a last-minute change of heart by local government minister Nick Raynsford gave more money to the Island - though only at the expense of Hampshire and its two maritime cities, Southampton and Portsmouth.

What is generally agreed, is that this year's change to the way that local government finance is calculated, is the toughest challenge faced by finance chiefs across the two counties and city authorities since the infamous poll tax of more than a decade ago.

What is also generally agreed is that the government has shifted funds from the so-called "wealthy" south so that council taxpayers in Southampton and indeed Hampshire and the Isle of Wight have ended-up footing the bill.

Just over two-thirds of Southampton's massive budget will be paid for out of central government coffers this year.

The formula for deciding how much money John Prescott's office gives to local authorities is immensely complicated, but in simple terms it is based on the amount the government believes the council needs to sustain a level of services.

This calculation, dubbed Formula Spending Share (FSS), is one of the two variables that councils use to decide on their budgets for the year. It was called the Standard Spending Assessment up until last year.

The overall budget calculation also involves estimating the amount of money the council will receive from a standard band D council tax which results in a fixed level of Revenue Support Grant received from the government.

Other money comes from another fixed amount - the cash the government provides from business rates, which are collected locally and then redistributed by central government based on the head of population.

What is left for councils to decide is how to raise the remaining money it needs. But there is a snag. That money can only be raised via council tax.

If the government reduces the level of grant it gives to authorities - but still expects them to sustain a certain level of services - then council tax must increase, otherwise services and jobs will be cut back.

This year, it has been calculated that Southampton needs to spend £229.9m in order to protect jobs and services.

But the government has only given a grant of £169.9m, leaving a massive shortfall. The amount of additional grant the government gave to the council this year was only £11.7m. But to spend what the government thinks the city should have been spending the grant increase from last year would have needed to be about £19.4m just to keep pace with increased demands on services.

On its own, that gap would leave a base council tax level of 14.13 per cent. But the council argues that additional pressures mean the true gap is not £7.6m as originally calculated but £8.1m for this year. It is this massive gap that has to be closed by city finance chiefs when they wrestle with budget figures this year.

It means that spending has to be reduced by £6.341m and council tax raised by an additional 4.76 per cent above the original estimate to the new figure of 18.89 per cent.

The additional money, some £2.485m is, according to the ruling Labour group, needed to protect vital services.

Opposition parties have a different vision of how to close the gap. In the run-up to the city's crunch budget meeting on February 19, there is still a lot to play for.

Statement from June Bridle - Southampton City Council leader:

SETTING the budget for the city is very similar to what we all do, every month of our private lives. Each of us has to balance our income against our commitments - by making those essential decisions about paying our way in life.

The council has to ensure those vital services like education, services to children and the elderly, refuse collection and street cleaning continue to meet the needs of those who live in Southampton.

This is what councillors are elected to do, and must do, in a responsible and prudent way.

The Labour-led council in this city has been managing the services and "balancing the books" for many years now and will continue to do so.

Most of the funding for the services comes from central government with less than 30 per cent being raised in the city through council tax and other charges like car parking.

The increased demand for more and better services, together with the government decision to provide less grant for Southampton, mean we all have to contribute a greater share if we are to maintain and improve the way we live and work in the city.

When asked during the recent Mori survey, what people would like the council to spend less money on, the only items mentioned were museums and art galleries.

Everyone was agreed that we should spend more on keeping the city clean, on creating a safer city and many more things, but there is a limit to what can be provided.

Anyone can slash this service or that and anyone can choose not to acknowledge some of the pressures that may change during the period of a financial year. The yet undecided level of pay for our firefighters cannot be ignored. This would be easy to do, but it would be completely irresponsible.

The people of our city know they can rely on their Labour councillors to protect their services and fight for a better quality of life for everyone.

Statement from Adrian Vinson - Liberal Democrat leader:

PROVIDING adequate services essential to our quality of life within a "reasonable" council tax is not just harder than ever - it has become impossible.

The blame lies firmly with a Labour government determined to shift resources from the south to the north, and 18 years of Labour administration in Southampton.

The Liberal Democrats propose a council tax of 14.6 per cent compared with Labour's 18.9 (which would have been 19.2 per cent but for a Liberal Democrat amendment to set the collection rate at the "true" level for recent years.

Our figure is achieved by radical pruning of expenditure, including much that in previous years would have been regarded as "essential". It will necessitate the tightest financial management, which our service users, taxpayers and staff, all of whom are being asked to accept severe sacrifices, have a right to demand. There are no "comfort zones".

Ours is also a budget of strict priorities - the priorities expressed by our citizens, and summed up as "safety first".

We focus on attacking neighbourhood nuisance and fear of crime and on promoting constructive outlets for young people. Not only do we reject Labour cuts affecting these areas, but we have found room for targeted initiatives on city safety, youth and play services.

We also include a £1m boost over two years to make inroads into the appalling backlog of neglect of our roads and pavements, which in the longer term should save on reactive maintenance as well as cutting costs to citizens and council alike of avoidable accidents.

This, with continuation of the Local Improvement Programme benefiting neighbourhoods which have not received major government grants, will be funded from slippage in the capital programme, which has averaged £4.4m a year over the past three years.

We reject Labour's ten per cent cut in grants to voluntary organisations which give excellent value for money in favour of a less damaging "freeze".

In summary, the Liberal Democrat budget offers value for money, protecting the most sensitive services and promoting safer neighbourhoods at the lowest responsible council tax through stringent economy.

Statement from George Melrose - Liberal group leader and councillor for Millbrook:

THIS year's budget of a near 19 per cent council tax rise, coupled with stringent cuts in services and jobs, is the product of mismanagement and prejudicial ignorance.

The present Labour council administration has for a number of years been clearly guilty of mismanagement.

Every budget they have set over the last five years or more is clear proof of that. The people of Southampton have been forced to pay ever-increasing taxes for diminishing services.

This year is made worse by the prejudicial ignorance of the Deputy Prime Minister.

He, along with most people from the north of England, except those who live here, are convinced that everyone who lives in the south are all well off. The reality, of course, is far removed from this.

The budget proposals due to be submitted by the Tories are, as usual, impracticable and designed only to attract votes in May.

The Liberal Democrat submission lacks any kind of imagination or innovation - the best that can be said is that it easier on the pocket.

THE Daily Echo invited Councillor Alec Samuels, leader of Southampton City Council's Conservative group, to comment on the forthcoming budget but he declined to do so. He said that it was more appropriate to present the Tory's plans when the budget is debated next week.