Surrey Heath Council Tax rise is to be the maximum allowed

11.11.51pm GMT Sat 4th Mar 2006

Warning: Council Tax increases ahead

Surrey Heath Conservatives are increasing Council Tax by the maximum allowed by the Government, 5% against an average across the country of 4%. But enormous cost overruns this year and a failure to address structural issue have also required transferring some £3.3m from reserves in order to maintain the Council's spending plans. Lib Dems have condemned the performance of the Executive this year and called for a total change of personnel to meet the increasingly serious financial situation in Surrey Heath.

Last year, council officers warned that the budget was "unsustainable". Whilst tight control was needed during the year and corrective action urgently required for the medium term, what happened was an overspend on services of £941,000. That's nearly 8% of the spending on services of £12.2m.

This overspend was the result of multiple budgeting errors when the budget was established, and poor financial control, in some cases taking nine months to detect problems that should have been visible in month 2! Detecting the budget issues so late meant that the only option to plug the black hole in the finances was to take money out of the reserves.

This year, despite the maximum increase, Council officers have again declared the budget unsustainable. This is taking account of a 7.3% increase in Government funding to Surrey Heath, and additional income of £800,000 per year derived from the Atrium development scheme.

A standard complaint of Surrey Heath is that Government loads them with new responsibilities without providing the corresponding funding. But this year this only accounts for a little over 1% growth in services cost. On the other hand, staff costs are increasing by £1.09m - over 12% increase from last year. This reflects an actual increase in headcount expected in the next year, as well as salary & pension cost increases

The use of reserves to fund day-to-day spending puts the Council in a downward financial spiral. This year the Conservative Executive are abolishing the Council's property maintenance fund, and using the proceeds to prop up their budget. In March 2004, Surrey Heath had £32.6m in short & long-term investments. By March 2005, this was down £8m to £24.6m. This year it will be lower still.

Addressing the full council meeting at which Council tax was set, Cllr Bob Smith said:" This year this has to be a cash-limited budget, with no budget overspends. Looking forward, the widening gap between the expenditure projections and our resources needs to be closed. With this Executive, we do not think we have the right team in place to deliver the result that is necessary. They self-evidently failed this year, and I see no reason why next year should be any different. The same people doing the same things will give the same result. And this year time is shorter and the need is greater"

At the same meeting, Cllr Cindy Ferguson said: "What sort of services do we get for all this money? We have Development Control unable to cope, the Housing Benefits section struggling, and the Audit Commission rating Surrey Heath the worst in Surrey. On Recycling, we used to be in the top ten in the country, but are not now even in the top 50 of local authorities. And the most recent report on affordable housing from Audit Commission is just terrible. We are judged 'poor with poor prospects for improvement'".

She continued:" And what is the response of the Executive to this situation? Denial! 'The Government does not understand us' and 'We are a special case'. Well, we are not much different to Rushmoor, Hart, Bracknell, Woking & Guildford. If they can live with it, so must we."