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the Public Information Officer on 01620 827199
To comment on this paper:
• email your views to: youpayhaveyoursay@eastlothian.gov.uk
• send your comments by post to: The Head of Finance, Corporate Resources,
East Lothian Council, John Muir House, Haddington EH41 3HA
• visit our website at www.eastlothian.gov.uk to take part in our online blog
We regret that, due to the volume of comments and the postal costs involved,
we are unable to acknowledge all written responses to the budget consultation.
You Pay… Have Your Say

EAST LOTHIAN COUNCIL BUDGET 2010-2013

COMMUNITY CONSULTATION PAPER – SPENDING CHOICES

Foreword by the Leader and Depute Leader of the Council

Over £280 million in public money will pass through the Council’s hands next year. While
that is a huge sum, with it we have to provide a myriad of local services to all our 100,000
residents. In the last two years, we have improved services by building affordable homes
and increasing service responsiveness, doing all this on time and within budget on existing
services. Now that our purse strings are expected to be tightened by as much as 12% in
reductions of that £280 million + over the next few years, we are extending our public
consultation to ask our residents what they think our priorities should be in allocating
reduced monies. We have our own ideas and they go well beyond efficiency savings in an
attempt to avoid the need to cut either services or staff. But the public can help us by giving
a steer as to what matters most to them.

Councillor David Berry Councillor Stuart Mackinnon
Council Leader Depute Council Leader

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What does the Council currently spend its money on and where does the
money come to pay for that?

Q) How much money does the Council spend each year?

A) That changes from year to year and the answer depends on what expenditure we
include. This consultation is about the part of the budget that is funded by the Council
Tax, which we usually call “General Services”. This excludes spending on Council Houses
which is funded by the rents charged. We call that the “HRA” (Housing Revenue
Account) and that is subject to a separate consultation. General Services capital
expenditure is indirectly included within the General Services budget as most of that
expenditure is funded by borrowing which has to be repaid with interest, which we
usually call “debt charges”.

So to answer your question, in the current year 2009/10 the Council plans to spend just
under £284 million on General Services as shown in the table below:

Service £ million
Education & Children's Including schools and children’s social 97.19
work services
Services

Community Services Including adult social care, culture and 132.07
community development, libraries
landscape and countryside, property,
sports and leisure

Environment Including planning, transportation, 26.56
waste management (including recycling)
& economic development

Corporate Resources & Including human resources, finance, 15.58
information technology, law & licensing,
Chief Executive’s Office
corporate policy, communications,
democratic services and customer
services.

Police, Fire & Valuation Contribution to shared service for the 12.25
Lothian and Borders regions.
Boards

TOTAL 283.65

Q) That shows which service the money is spent on but what does the Council actually buy?

A) The Council buys a huge range of things to allow it to provide those services. We have
lots of information on this but broadly this is what we plan to buy in 2009/10:

£ million
Employees
Local government employees 78.17
Teachers 44.89
Craft employees 5.13
Chief officers 1.50

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Councillors 0.50
Early retirement – costs arising from
previous decisions 1.17 131.36

Goods & Services
PPP (Public Private Partnership for school
and community buildings) 8.18
Other Services (e.g. care homes) 67.80
Goods & materials 9.45 85.43

Housing benefit payments 17.73

Debt charges 15.20

Building expenses
Rates 3.15
Energy 3.58
Repairs & maintenance 2.51
Cleaning & janitorial 4.15 13.39

Fire, Police and Joint Boards 12.33

Grants to other organisations 8.21

TOTAL 283.65

Q) So where does the money for that come from?

A) Most of it comes from Scottish Government grants as shown in the table below.

Source of income £ million
Scottish Government grant 179.45
Council Tax 44.95
Trading Activities 24.55
UK Government grant 18.91
Fees & Charges 9.01
Use of reserves 3.75
NHS Contributions 3.03
Total 283.65

Q) Use of reserves is not really income is it?

A) Correct, but it has the same effect in the year the reserves are used. The main
difference is that all the other sources of income are largely sustainable from year to
year. Reserves are not a sustainable source of income. Eventually they will run out. So
they can only really work as either a source of funds for projects that do not have
recurrent costs or they can be a “stop-gap” measure whilst income and expenditure are
brought into balance.

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What do the UK and Scottish Budgets in 2009 mean for East Lothian
Council?

Q) There has been a lot of information in the media recently about the UK public sector
deficit. What has that got to do with the Council’s finances?

A) The main link between these things comes from the fact that most of the Council’s
money comes from Scottish Government grants not Council Tax. Most of the money that
the Scottish Government has to spend comes as grant from the UK Government.
Basically the UK deficit can only be fixed by either raising more income (i.e. increasing
taxes) or reducing spending. If the UK government reduces spending, that will probably
reduce the money the Scottish Government has. As around a third of the Scottish
Government’s money is spent on grants to Councils, if they have less they will probably
reduce the grants they give to Councils.

Q) So is this what happened in the Scottish budget announced in September?

A) Yes. There are debates about the size and meaning of some of the numbers but the
Scottish Government funding compared to previous plans reduced by £500 million, and
£174 million of this was passed on to Scottish Councils.

Q) How much of the £174 million is being taken off East Lothian Council’s grant?

A) We don’t know yet. We have to wait until Scottish Ministers have finalised their
proposals on how grants will be distributed across all 32 Councils and announce that in
Parliament. This happens every year and is usually called the “Local Government
Settlement”. We hope to have these very important numbers soon. Until we are told the
actual figures, our estimate is that the Council grant will be around £3 million less than
previously planned.

Q) Do you mean that the grant is actually going to fall by £3 million next year compared to
this?

A) No. This is one of the most confusing things about the media debate on this subject as
some people say grant will fall but others say it will rise to new record levels.

Q) So who is right?

A) They both are. The grant will be falling in real terms but rising in cash terms but maybe
I should explain what is meant by that. Say I get a grant of £100 one year and £102 the
next year. Clearly the grant is growing in cash terms. But if inflation were 3%, that £102
would be a real terms reduction because in order to give me the same spending power
in real terms the grant would have to increase to £103. Scottish Councils recently
commissioned an independent review of how the UK budget would affect the finances of
Scottish Councils. The conclusion reached is that we expect the value of grants to fall at
least 4% a year in each of the next three years. In other words, even though the grants
may increase slightly, because the cost of services will probably increase faster, Councils
will be able to afford to provide fewer services.

Q) But Councils can raise money through the Council Tax. If grants do fall as you suggest,
why don’t you just increase the Council Tax?

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A) We could do that. Councils can tax as they choose and so could make up for the loss of
grant by taxing more. But in practice it is not that simple. Scottish Ministers still have the
ability to cap tax increases at whatever they feel is a reasonable level and in recent
years they have chosen to give a strong financial incentive to Councils to freeze the tax,
which is what Councils across Scotland have done.

Q) How does that incentive to freeze Council Tax work?

A) Freezing the Council Tax is a priority for the Scottish Government and they have made
part of the grant they give to each Council conditional on there being no tax increase.
This complicates the decision about whether to increase the tax or not as a small
increase actually leads to a loss of income for the Council. A bigger increase would
provide more funds but obviously would not be popular with the electorate. The table
shows how this works

% tax increase Additional Additional Overall Overall
tax grant (£ Change in Effect of an
(£million) million) income (£ extra 1%
million) tax increase
(£ million)

0% 0.00 1.36 1.36 0.00

1% 0.45 0.00 0.45 -0.91

2% 0.90 0.00 0.90 -0.46

3% 1.35 0.00 1.35 -0.01

4% 1.80 0.00 1.80 +0.44

5% 2.25 0.00 2.25 +0.89

So, no increase in Council Tax and we get £1.36 million more income but if the Council
made a small increase in Council Tax of say 1%, overall income would actually fall by
£0.91 million. Another way to look at this is that an increase of 3% would give no extra
income.

What is the Council proposing to do to cope with the changes in grant?
Q) If grant income is falling in real terms and a Council Tax increase can lead to less money
available for services, how is the Council going to cope with any cost increases?

A) Exactly. That is the big question and the main reason for this consultation

Q) If the problem is that costs will increase faster than the grant increase, then doesn’t that
mean the Council has to find ways to slow down their increase in costs?

A) Basically yes, unless it can find ways to generate extra income.

Q) So why are costs going up as fast as they are?

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A) The answer to that depends on which costs you look at. The biggest element of cost
shown in the table is employees. Even if the Council decides to employ no more people
than it already has, employee costs would increase for three reasons:

1) Some employees already have an annual cost of living pay increase agreed for
2010/11 e.g. teachers pay will go up 2.4%, which will lead to a cost increase of
£1.13 million.

2) The pay of most employees is set within a range and each year they move up an
increment within that range. This applies to Local Government employees and the
cost of those increments in 2010/11 is estimated as £1.45 million.

3) The Council operates defined benefit pension schemes for its employees, as required
under law, and the cost of pensions earned by the past service of employees is
increasing each year as assessed by an independent actuary. The cost of this
increase for non-teaching employees in 2010/11 will be £0.46 million.

So without employing any extra staff and excluding any cost of living increases yet to be
agreed, employee costs are going to increase by over £3 million in 2010/11.

Other costs will increase because there are contractual commitments with suppliers or
because of decisions already taken. For example, debt charges will increase by £1.5
million in 2010/11 simply to cover the cost of capital investment made in 2009/10 or
earlier.

Q) It seems that the Council can no longer afford all of those commitments. If they are not
legally enforceable why doesn’t the Council change what it is committed to?

A) Although the Council could break some or all of the commitments that are not
enforceable in law, it would not want to do that. For example, on employee costs, all
Council services depend to some extent on employees for delivery. The Council has
invested heavily in developing that workforce and relies upon it as a key part of
delivering the range and quality of services that it aims to provide. To maintain and
wherever possible improve those services, the Council wants to work with its employees
and breaking commitments already made would not help that.

Q) So is the Council saying it cannot manage these costs?

A) No. The Council can and will manage these costs but it wants to do that over a longer
period of time. It plans to do this over the next 3 years and demonstrate that through a
3-year budget.

Q) If it is going to take time, then what can the Council do in the short-term to reduce its
costs?

A) We are already making some changes to how we operate that will reduce costs, such as
reducing office accommodation in Haddington and the cost of printing throughout the
whole organisation. We know we have to further improve our processes and operational
efficiency. We are making progress, but much bigger changes will be needed if 4% real
reductions in funding actually occur.

Q) What do you mean by “much bigger changes”?

A) Simply put, the organisation cannot continue to operate as it currently does if grant
reductions of the expected size occur. We are likely to see more changes like the
transfer of all sports centre operations and employees to a new organisation (Enjoy East

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Lothian) on 1 October 2009. If we cannot identify extra sources of income, then some
services will have to be reduced or at least there will have to be significant changes in
how they are delivered. The Council is considering a range of changes that it could
make.

Q) Can you give examples of the changes being considered?

A) Yes. The following are some examples of the sorts of major changes that have to be
considered. We stress that no decision has yet been taken on what changes will actually
be made but we expect that people will want to comment on changes such as these as
part of the consultation. Given the scale of what we face, we have only included changes
with an estimated value of at least £100,000.

The examples follow 5 broad themes although there is some overlap between them.

Workforce Management including changes to when new employees are recruited (also
called “vacancy management”) and better work planning to realise opportunities to work
smarter and reduce costs
Proposal Annual Cost reduction
(£ thousands)
Replace some nursery school teachers with nursery nurses 120

The number of teachers working in a nursery setting would be reduced, but
all children would still have access to a qualified teacher.

Increase S1/2 Maths and English class sizes 200

In 2007, in accordance with national guidance, East Lothian Schools
introduced an average class size for S1/2 English and Maths classes of 20.
This option would return to the legal maximum class size for such classes as
per teachers' conditions of service, i.e. 33.
Reduce Secondary schools’ staffing 400
Reduce Primary schools’ staffing 400
Increased use of composite classes 120

A composite class is made up of primary school-aged children from more than
one year group. The maximum number of children in a composite class is 25.

Reduce number of management posts in schools 200
Reduce management time in schools 400

Most school managers carry a teaching commitment in addition to time
dedicated to management tasks. This would increase the proportion of
teaching time for managers.
Reduce Adult Social Care staffing through vacancy 200
management

Extending vacancy management measures to delay recruitment to vacancies
that arise would achieve savings, but it would reduce the capacity of the
service to respond to growing demand for social care services.

Reduce Adult Social Care staffing through redesign of key 250
service areas

Areas of Adult Social Care services will be redesigned over the next 3 years.
The transformation programme would offer opportunities to reduce staffing
levels in some areas of the service.

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Freeze the Corporate Resources and Chief Executive’s Office 500
budget (i.e. absorb all cost increases within existing budget)
This would impact on a wide range of services including human resources,
finance, information technology, law & licensing, corporate policy,
communications, democratic services and customer services.

Procurement, including possibly tendering for services not currently exposed to market
competition, which would involve elements of service redesign
Proposal Annual Cost reduction
(£ thousands)
Transfer schools into an educational trust or trusts (reduced Unknown until tried
rates costs)

There may be benefits in establishing educational trusts to deliver education
on behalf of local communities. Such trusts may be able to access additional
funding from other sources, and may also benefit from the not having to pay
rates.

Outsource a selected service to provision by a private sector Unknown until tried
contractor

Merge a service with another Council i.e. shared service Unknown until tried
Outsource higher proportion of domiciliary care services 500

This would reduce the capacity of our in-house service and increase the
purchase of domiciliary care hours from private providers at lower cost than
the in-house service.

Outsource provision of Council provided care homes 450

We currently provide care to 126 people who live in our 4 care homes. The
cost of providing care in these homes is higher than the cost of purchasing
similar care from private providers through the National Care Home contract.
Encouraging the further development of private provision would allow the
Council to purchase care at lower cost.

Service redesign, including both shared services and service reduction.
Proposal Annual Cost reduction
(£ thousands)
Adult Social Care – Restrict levels of care the Council provides 1,000
to people who need social care support by managing demand
within available resources.

We would place limits on the levels of service we provide, or the level of Direct
Payment we make to people requiring services, and focus our resources more
on providing services to people with critical needs. The length of time people
wait for services would increase as would levels of unmet need.

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Re-design Adult Social Care day services and rationalise day 100
service provision on fewer sites

We would redesign our day services in the next 2/3 years as part of our work
to provide increasingly personalised services to people with disabilities. As we
provide these in different ways, we should examine whether we need to
continue to provide services from the existing 4 sites.

Discontinue providing home help service 150

The home help service provides non-personal care support, mainly to older
people. Discontinuing this service would achieve significant savings.

Reduce provision of some low level social care services 400

The Council currently provides ‘low level’ support and other ‘preventative’
services to a large number of people. Reducing the levels of these services
would achieve significant savings.

Rationalise management of Adult Social Care as part of 100
integrating service provision with NHS and Midlothian Council

As we transform health and social care services to create an integrated
network of services with NHS and other partners, we will be able to reduce
the number of senior management posts in Adult Social Care.

Provide home to school transport only for legal requirement 120

This would apply to pupils attending secondary schools. The Council is
required to provide transport for pupils living 3 miles or more from their
school. Transport has been provided to pupils living 2 miles, and in some
cases less than 2 miles from their school; this transport for shorter distances
would be withdrawn.
Reduced financial support for public transport 150

The Council provides financial support to bus companies to operate services
that are not commercially viable, for example services in more rural areas and
those in the evenings and at weekends. Under this proposal the Council would
reduce the number and/or frequency of supported services.

Reduced roads maintenance including winter maintenance 165

Some of activities carried out on the road network go beyond the minimum
required to comply with the Council's legal responsibilities and could be
reduced or ended without compromising public safety. The suggested
reduction in winter maintenance would involve withdrawing cover from streets
that are not on an A or B class road or on a bus route.

End current provision of annual bedding and hanging basket 165
displays and replace with more sustainable planting

Whilst current provision undoubtedly contributes to the attractiveness of East
Lothian, it does come at a significant cost to the taxpayer and the current
production methods are not eco friendly. The substitution of such displays
with perennial and herbaceous plantings that would flower and present
attractive displays year on year is an option that would reduce costs and
enable carbon emissions to be reduced.

Redesign building cleaning and school meals service 110

Deploying more generic working practices and streamlining some aspects of
building cleaning and catering activities would reduce costs. This would
require the services to further restructure with an aim to remain competitive
in what is an already extremely competitive market

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Expand the opening hours of the libraries in the 6 main towns 160
and close smaller libraries
Current opening hours of libraries throughout East Lothian fall significantly
short compared to other Councils. The cost to extend hours for services as
they are currently operated is prohibitive. One means of addressing this would
be to maximise opportunity in existing and refurbished town libraries by
shifting resources from smaller community libraries, which could involve some
closures.

Income generation: should the Council be charging for all things that other councils
charge for and should we be doing so at the national average?
Proposal Annual Cost reduction
(£ thousands)

Extend charges for non-residential Adult Social Care services 100
to generate additional income

The Council levies charges for some social care services in line with Scottish
Government guidance. Extending the scope and level of charging for services
would generate additional income.

Introduce charges for off-street car parking, including at John 110
Muir House, and roads control at galas and other events

This proposal would bring East Lothian in line with many other Councils in
Scotland and would be the first stage of a wider review of managing on- and
off-street parking.
Increase charges for evening lets and out of school care 160
provision in Council properties

By rationalising all that takes place in public buildings in any one community,
particularly in the 6 main towns, we can potentially generate significant
savings and reduce utility consumption and general carbon emissions. Surveys
tell us that our charging rates for lets are in some cases much less than other
Councils and a shift to average Scottish council charges would generate
additional income.

Charge for services provided to galas and events by Amenity 100
Services
To provide marquees etc and associated support to the many gala and events
that take place each year in East Lothian costs the tax payer £100,000 a year,
which is generous compared to other Councils. The Council and communities
realise the importance of such civic and community festivals but such support
could be charged for.

Increase burial charges to the national average 116

We know from recent survey work that East Lothian Council rates for lair
charges, interment charges and ashes charges are on average some 57% less
that other Scottish Councils

Introduce coastal car parking charges 180

We know that this option has been considered previously and dismissed at
that time. However given the unprecedented financial pressures that we now
face it may be appropriate to re-examine earlier options. Every £1 that can be
secured through income generation lessens the likelihood and size of potential
service cuts.

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Restricting the capital programme, including reducing the amount of capital programme
spend and possibly suspending some new start capital projects
Proposal Annual Cost reduction
(£ thousands)

Information & Communications Technology in schools – 102
reduce replacement frequency
Trading operation - introduction/roll-out of mobile working for 100
craft operatives and increasing the surplus generated by
Property Maintenance.

Q) Finally, when will everyone know what changes are going to be made?

A) That decision will be taken in February 2010. We do not have a date fixed yet, but there
will be a special meeting of the Council to set the General Services budget and Council
Tax at which each political party usually presents their budget proposals and votes on
what is to be adopted by the Council. Look out for further details in the local press or
online at www.eastlothian.gov.uk

Consultation Question and Making Your Response

All possible spending choices are difficult, but of those difficult choices, which do
you feel/think, are the least unacceptable?

If you would like to express your views on the above question or any other issues raised in
this consultation, please send any comments by letter or e-mail to the Head of Finance no
later than Friday 4 December 2009.

Address: E-mail:

Head of Finance youpayhaveyoursay@eastlothian.gov.uk
You Pay… Have Your Say
East Lothian Council
Haddington
East Lothian
EH41 3HA

David Spilsbury
Head of Finance
19 October 2009

www.eastlothian.gov.uk

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