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The Budget: your questions answered
The Budget: your questions answered
Responses from the Council to various questions raised on the On-Line Budget Forum
Between 28 January and 11 February 2008, an online forum allowed residents to make comments on the Council's budget for the forthcoming financial year. A number of interesting discussions took place with some participants asking questions or looking for clarification on certain issues.
Below is a summary of those questions and the responses submitted on to the forum by the Council.
Discussion topics
(click on one of the links below to take you straight to the discussion topic of interest or scroll down the page to read the all the topics in order)
Cut Council Tax by 3%
Comment(s) made on the forum: "I find it very difficult to believe that Kingston is in a worse position with regards to the settlement from central government than other councils.
"Richmond upon Thames should be a similarly affluent area, yet its Band C council tax last year was 2.1% less. I suspect that holding back costs is not as high up the agenda as it should be."
Response from the Council:
As an Outer Borough in South London the formula grant distribution mechanism works to disadvantage our residents disproportionately, with the result that our residents pay the highest levels of council tax, even though we are one of the lowest spending authorities.
Council tax currently meets 69% of our net revenue expenditure, compared with the Outer London average of 52%. Our increase in grant for 2008/09 is 2%, the minimum possible this year. This equates to £705,000. Increases in taxes imposed by the Government will increase our costs by £675,000 (Landfill tax is increasing by £8 per tonne (33%), and business rates - which have to be paid by the Council on the buildings we use to provide services - by 3.9%. This leaves just £30,000 to meet all of the other increases in costs and demands for services.
The Council is always seeking to manage its costs and provide services in the most cost-effective manner. Our external auditors, the Audit Commission, have stated that "The Council is a high performing Council with relatively low costs”.
Areas of relatively high and low spend are known and the reasons understood. The Council has targeted investment to improve services in priority areas and reduce costs in the longer term. The Council has an embedded value for money culture.
Council Tax Calculation 2008/09 and Staffing Levels
Comment(s) made on the forum: "As the Council officials have already set a tax base for 2008-09 on 29th January, what use will our comments be about wanting the council tax to be lowered this year? It is no use giving the public information about the budget, if decisions are taken without reference to what voters want.
"One way to reduce the tax would be to take our contribution to Lee Valley Regional Park Authority out of the cost altogether. Since the Government squeezes the council each year in what it gives in grant to the Royal Borough, we should hit back and declare certain items are now "off our books".
"If we are to have a Council Tax surplus of around £200,000 for the start of the new financial year, some of it should be used to stop the tax rising to all residents in the borough.
"I believe there is still too much waste in the system. And we need to know that the previous pleas for no more staff to be taken on (full or part -time) has been heeded."
Response from the Council:
The council tax base is simply the number of properties used to calculate the council tax for the coming year and council’s use the middle band D as a way of stating a comparable average. The council tax has to be set before 31 January, so that demands of the London-wide bodies (e.g. the Greater London Authority) can be calculated and shared out between the Boroughs on an appropriate basis.
The more important part of the council tax calculation for Kingston is the level of the Council's own budgeted expenditure, and this will be fixed by the Council on 27 February 2008. Contributions to this online forum will be considered as part of that process.
As far as the Lee Valley Regional Park Authority is concerned, the council is required by law to contribute - our contribution is proportional to the council tax base. We have no discretion over this matter.
And in response to your suggestion regarding using the Council Tax surplus to offset bills, that is exactly what happens. Surplus arises because we estimate before the start of the financial year the number of new properties, plus entitlements to Council Tax exemptions and single person discounts. The surplus reflects the difference between actual income received from council tax at the end of the financial year and the estimated income calculated when the tax was set at the beginning. The surplus is deducted from the amount to be raised in the following year as part of that year's tax setting calculation.
The Council is always seeking to manage its costs and provide services in the most cost-effective manner. In 2007/08 our budgeted spend per head of population is £709, compared with the average for other outer London boroughs of £755. The Council’s external auditors (the Audit Commission) have stated that "The Council is a high performing Council with relatively low costs. Areas of relatively high and low spend are known and the reasons understood. The Council has targeted investment to improve services in priority areas and reduce costs in the longer term. The Council has an embedded value for money culture."
Staffing numbers show a downward trend over the last few years:
- 2005 – 2,232 staff
- 2006 – 2,116 staff
- 2007 – 2,032 staff
Budget proposals for 2008/09 will result in further staffing reductions of about 75 jobs and the downward trend is expected to continue the following year.
Rose Theatre
Comment(s) made on the forum: "I went to the Rose last Saturday to see Uncle Vanya. I thought it was an amazing production and the theatre is absolutely superb. I will certainly pay to go to the theatre again.
"Despite this, I feel that 99% of RBK residents will never go to the theatre and have little interest in it.
"This comes in addition to the fact that we live within a 20 minute train ride of the West End (with the Old and Young Vic located right next to Waterloo Station and many other world class theatres within a short walk).
"If council money has been spent (or lent) to the theatre then that is a disgrace. Many families in the borough have little enough cash as it is and adding these sort of luxuries to their council tax bill when they are already struggling with money is plain wrong.
"How much council cash has been spent / lent / guaranteed by RBK? - it is not altogether clear from the accounts. Can anyone clarify this please?
"It is these sort of nice-to-haves that must be scrapped immediately and given back to the taxpayer."
Response from the Council:
The Council is planning for the long-term and the opening of the Rose Theatre is a crucial step in fundamentally changing the night time profile of Kingston town centre – which is what residents tell us they want to happen. The theatre can be a catalyst for further evolution and mark the beginning of a change in the experience of Kingston after dark.
Construction costs of the Rose Theatre of around £10,000 a seat represents very good value, compared with other theatre projects around the country over the last four years which range in cost from £17,000 to £48,000 a seat.
To achieve the long term objective, the Council provided approximately £6 million in capital costs to fit out the theatre. As a result it now has a substantial capital asset, because RBK has a 95% holding in the Limited Liability Partnership that owns the building.
The Council also provided loans for working capital to the Theatre Trust to assist it to operate during the period while the theatre was being built, so that it was able to operate before the theatre opened to the public. The Council’s policy is that now the theatre is open, it will not provide any further funding to the Theatre Trust.
The Council’s Pension Scheme
Comment(s) made on the forum: "The RBK pension fund had liabilities of £400.7m at March 31st 2007 but assets of only £240.3m - representing a shortfall of £160.4m (statement of accounts 2006/07).
"Despite this, the council is still investing in balanced funds (having only Capital International and UBS Global Asset Management as asset managers).
"Kingston's pension scheme is in a much worse position than many other council schemes that have diversified investment portfolios to boost returns and reduce risk.
"It has a return on investments substantially lower than the local authority average.
"Given this, is the council considering appointing other asset management firms in order to get better returns and diversify away from risky equities?
"Is the council considering joining bodies such as the Local Authority Pension Fund Forum in order for elected members to receive further training on investment matters.
"In 2006/07, RBK paid £12.7m into the pension fund. In 2005/06, it pumped £11.7m into the scheme.
"If RBK managed to get AVERAGE investment returns, the need for these payments would be very much reduced.
"Given the vast amounts of money being put into the scheme, isn't it about time councillors devoted a bit more time to improving the investment strategy (and increasing investment returns)?
"Any comments on this would be very much appreciated."
Response from the Council:
The 'shortfall' referred to of £160.4 million is the net pensions liability on the balance sheet which is required to be recognised in the statement of accounts. This is a snap shot of the Pension Fund’s current and future liabilities which will fall as current contributing scheme members retire and receive a pension.
The Council has developed a fund investment strategy after taking appropriate professional advice. There is a recovery plan to ensure that the scheme is fully funded over 18 years taking a risk based approach.
The Pension Fund's relative three year return is 1% below the Average Local Authority Fund benchmark of 12%. In part this reflects the passive funding strategy which produces returns closer to the benchmark with less volatility than active fund management.
The Fund is already diversified through investment in equities, property and bonds.