Public Services Management: If the cap hits . . . cut it: Tough new government limits on council budgets will mean job losses and reduced services, reports Andrew Evans

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CLYDEBANK District Council, on the north-west outskirts of Glasgow, froze its budget last year to avoid capping. This year the Government wants the Labour-controlled authority to make a further cut of 10 per cent.

The new limits on councils' budgets are the toughest since capping began in 1985. And Clydebank's cut - matched last year only by Derwentside district in Durham - is the highest in Britain.

In England, 15 councils - four of them Tory-led - will have to make cuts of up to 7 per cent to avoid capping. Forty will have to freeze their budgets, and a further 219 will be allowed rises of less than the current 2.6 per cent rate of inflation. In all, 274 councils - two-thirds of all English authorities - are facing cuts in real terms in a grant settlement that is expected to be confirmed by the Government today.

In Wales, about 15 councils - one in 3 - and some 26 Scottish councils (more than 4 in 10) will be allowed rises of less than inflation.

A survey this month by the Local Government Chronicle suggested that more than 33,000 local authority jobs will be shed this year in England alone. Clydebank is a double loser from this year's grant settlements, which are due to be confirmed by Parliament within the next week or two. It is the only district in Scotland whose spending target - the amount the Government says it should spend to provide a 'standard' level of service - has been reduced.

The 1.2 per cent reduction, largely the result of new population figures from the 1991 Census, compares with an average rise of 3.4 per cent for district councils in Scotland, 2.2 per cent for English districts, and 9.9 per cent for Welsh districts. Clydebank also loses out because last year's special capping rules for the biggest 'overspenders' are not being retained in Scotland this year. Those rules would have allowed the council to freeze its budget for a second year. So Clydebank is planning to bust its 1993 / 94 capping limit with a stand-still budget, avoiding compulsory redundancies, but hoping that Ian Lang, Secretary of State for Scotland, relents.

Meanwhile, the Tories who took control of capped Basildon last May are confident that they can achieve the 7 per cent budget cut needed to avoid capping in 1993. Most of the cuts have already been made, with the loss of some 350 jobs. Tony Archer, the council leader, a 52-year-old building society manager, says: 'The full-year effects of that budgetary reduction are now being felt, so I do not anticipate that there will be further job losses. We have been through that pain barrier already.'

There is similar optimism from two other districts where the Tories took control last year.

In Welwyn Hatfield, facing a 5 per cent cut, the Tory leader Patrick Barnes, a retired pharmaceutical manager, says: 'We have had to make fairly drastic reductions in expenditure already, so we will be able to come well within the capping limit.'

Those cuts in the council's original 1992 / 93 budget had involved about 55 redundancies, most of them compulsory. Further savings will come from debt redemption and, in September, from reductions in council tax staff. Meanwhile the authority is pressing the Government to increase its spending target to reflect the additional demands of a former new town area.

In Barrow-in-Furness, also facing a 5 per cent cut to avoid capping, councillors have agreed to undercut the cap by a further 4.5 per cent. This is still 30 per cent above its government spending 'target'. The proposed cuts include the closure of a battered wives' refuge; reductions in leisure services and grounds maintenance; and privatisation of internal audit. The borough leader Ted Smith, a retired Tory agent, says there will be about 25 job losses, some of them compulsory. 'You can't make that kind of reduction without affecting jobs.'

Gloucestershire's Stroud district, where the Tories are in minority control, needs to make a 3 per cent budget cut. The council has enough reserve funds to avoid capping this year, but longer-term savings could mean about 11 job losses this year and higher charges for pensioners' bus passes.

Several of the other shire districts most at risk from capping are expecting somehow to bring their spending down to the Government's limit. Resident-

led Elmbridge in Surrey, facing a 5 per cent cut, has already reduced its budget substantially through the sale, last year, of two redundant town halls. This allowed the council to cut its budget by 6.6 per cent last year, with some pounds 1.5m left over to put in the bank. But Elmbridge is still seeking further savings. The council also benefits from a 'moving targets' factor. The 8.4 per cent rise in its standard spending assessment (SSA) this year is among the biggest in England.

The council leader, Ernest Mallett, describes the capping system as 'a joke', which encourages councils to spend up to the limit so as to maximise their limit for the following year. Elmbridge plans once again to spend up by paying money into its reserve funds. 'If there was no capping, our budget would probably be about pounds 1m lower,' Mr Mallett says.

Labour-led Wansbeck district in Northumberland, facing a 5 per cent cut for the second successive year, expects to avoid capping through continued savings and the use of some pounds 1m from reserves. There will be an overtime ban and staff vacancies will not be filled.

Liberal Democrat-led Wear Valley district in County Durham, also required to make its second cut of 5 per cent, is being advised by its finance director, Eddie Scrivens, to avoid being capped. But, because the council drew from balances last year, the real cut required is nearer 17 per cent. Wear Valley's problems are compounded by the 'moving target' factor, with a 2.1 per cent reduction in its SSA, mainly due to declining population.

Liberal Democrat Adur district, at Shoreham, Sussex, faces a 5 per cent cut on top of a cut of 7.6 per cent last year. The finance director, Adrian Clapp, foresees 'real problems' avoiding capping. 'We will comply, I guess, like most authorities,' he says.

Labour-led Stevenage is already shedding 55 posts, 15 of them compulsorily, to cut its budget by the required 3.6 per cent. Watford (down 1.6 per cent) and Ipswich (down 0.8 per cent), both Labour-controlled, believe they can make the required cuts without sacking staff.

Harrogate, too, where the Liberal Democrats are in minority control, is confident it can, through efficiency savings, make the necessary 0.4 per cent cut. Like Elmbridge, the borough built up balances last year, but further job losses are not ruled out.

Derwentside district, which cut by 10 per cent last year and shed 41 jobs, will have to cut a further 5 per cent. Alec Watson, the Labour leader, warns: 'There's no job safe. It's heart- rending. We're really cutting into the bone.'

Labour's minority leadership in nearby Langbaurgh district, which appealed - with partial success - against its cap last year, is still deciding whether to bust the limit again this year or to finance the 4.6 per cent cut by increasing concessionary fares.

But the council with the biggest capping problem in Britain is almost certainly Harlow district, in Essex. Officially, the cut required is 5 per cent. But Labour-led Harlow, gambling on a Labour victory at the general election, drew a massive pounds 10m from reserves last year to protect its budget from big cuts. Now, with less than pounds 3m remaining in reserves, the real budget cut required this year is said to be more than 50 per cent, with a consequent threat to more than 800 jobs.

The council leader, Richard Howitt, a 31-year-old social worker, sees little prospect of avoiding capping. 'We are not ideologically just ignoring the Government and putting our heads in the sand,' he insists. 'But pounds 13m of cuts would decimate everything that has been built up over the last 40 years as a new town. You don't go through the misery and chaos of the capping process unless you are absolutely forced to. The whole game of capping is to avoid being capped in the first place. Once you are trapped in the cap, there's no way out.'

Like Clydebank, Harlow will be busting its limit and throwing itself at the mercy of Tory ministers.

(Photograph omitted)

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