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Finance FAQs

How much money does the council have to save?

Islington is being hit harder than any other London borough by government cuts - we are having to save around £100m between 1 April 2011 and 31 March 2015. This is due to a combination of a cut in government grants, together with additional costs outside of our control, for example, the increasing cost of waste disposal, or changes in the borough’s population meaning that more people need council services.

In the 2011/12 financial year we were required to make cuts of £52m in the council’s budget in order to balance our books. This was due to a combination of government cuts of £39m and the need to respond to increased demand for some services (such as child protection and providing support for people with learning disabilities) costing an additional £13m.  The majority of the necessary savings have been identified through £31m of efficiency savings and increased income, helping us to significantly reduce the impact on front line services.

We expect to have to save a further £50m over the three year period starting in April 2012, though this assumes there will be no further changes to our funding from central government. 

It is impossible to make cuts on this scale without the impact being felt but the council is doing everything possible to minimise the impact, particularly on our most vulnerable residents.  Three core principles have been stuck to in all the difficult decisions that have had to be made:

  • Fairness: protecting the services which those on low-incomes rely on and those that reduce the gap between the rich and poor in our borough.
  • Cutting waste: protecting services as best we can by demonstrably cutting waste and inefficiency.
  • Keeping our promises: using our reduced budgets to tackle the big issues that matter to our residents: housing, crime, education, employment, health and providing good basic services.

Does the council keep money in reserves at the same time as making cuts?

Councils are required to keep an appropriate level of money in general reserves to cover unexpected costs. Our policy is to have 5% of our net expenditure held in reserves, which is currently £13m, and this policy has been supported by our auditors. This is the equivalent of a person earning £25,000 a year having savings of £1,250 saved up for a rainy day.

We hold additional earmarked reserves to pay for specific one off projects which support the council’s priorities or where we have a future financial commitment that we know we’ll need to pay for.

Using this money to fund ongoing front line services is not a sustainable approach as these reserves aren’t budgets that are renewed each year. Instead it is like a savings account – once it is spent it is gone. Our reserves can be viewed in our statement of accounts which is published on our website:

Does the council spend all of the budget available?

We set our budgets a long time in advance, and circumstances change during the year, meaning that we do sometimes have small underspends. If we think that this money is no longer needed we will use it to offset any areas of overspending in the current year and remove it from the budget for the next year.

We can also get one off additional income by doing things such as claiming back VAT or if more people use paid for services than we anticipated, giving us a surplus at the end of the year.

How has the council tried to reduce the number of job losses and compulsory redundancies it will have to make as a result of cuts?

For the last two years wherever possible we have not filled any vacant posts in the council when people have left. This has helped us to minimise the number of compulsory redundancies we’ve had to make. We have identified 32 vacant posts which will be deleted in 2011/12 in addition to over 60 posts in the previous year.

This year (2011/12) the council also implemented a voluntary redundancy scheme to help make savings for next year (2012/13). 64 voluntary redundancies have been agreed so far. A further 28 voluntary redundancies will be agreed should we be able to fill their post from our list of ‘redeployees’ that is, people who would otherwise be made redundant.

Can’t the council save money from the back office?

Councils are sometimes criticised for spending too much money on the so called “back office” – staff who are not providing a direct service to customers. This wrongly suggests that back office staff do not add any value to the council. The reality is that both back and front office staff are needed to provide a service.

For example, to protect vulnerable children requires both children’s social workers (‘frontline’) and lawyers (‘back office’) to ensure that protection orders are granted by the courts. Lots of these back office services allow the front line staff to do their work. For example, if we didn't have ‘back office’ cleaners then our libraries and public buildings would not be in a fit state to open to the public.

Back office staff can also do work that generates income for the council. For example, we need staff to collect council tax, making sure that we are able to collect £84m each year.

So, while it is true that we want to protect frontline services, it would make no sense to cut back office services if in the long run it would hinder frontline services or cost us more than we would save in lost income.

Why doesn’t Islington Council share office services with other councils to save money?

We are looking at some of these opportunities, and if there is clear evidence that they will save money we will commit to them. In lots of cases, if you bring two services together, you still need to do the same amount of work, and will therefore need the same amount of people to do it. Or we might need to make a big investment to share the service where the saving that we could potentially make might not be worth it.

There are some cases where sharing is more likely to be financially feasible, for example, where we have lots of assets that we could share (e.g. buildings) and we are investigating these opportunities.

Can the council save more money?

Sometimes councils can combine their spending power and get goods and services at a cheaper price. Again, we are exploring these opportunities and will commit to them where it will save money. We have already entered shared procurement arrangements on some contracts which has saved us a considerable amount, including school meals and insurance.

We’ve recently saved £700,000 a year by renegotiating IT and environmental related contracts and we’ve been able to save around £1.5m a year by relocating our staff and making better use of our office space.

Other examples of some of the things we’ve done to reduce our costs include:

  • School meals – We have saved £900,000 a year by agreeing a shared contract with Camden Council
  • Insurance – We saved £300,000 by sharing our insurance contract with other boroughs, helping us to get a better deal
  • Treasury returns – Intelligent investing generated £3m in additional interest from our bank accounts last year
  • Collecting income – We had our highest council tax collection rate last year and have also been able to maximise our income opportunities, generating £2.9m in additional income.
  • Consultants and agency – reducing numbers of consultants and renegotiating contracts with suppliers has saved us £2m last year in agency fees alone.
  • Insourcing external contracts – We have taken services in-house where we can do it cheaper or better ourselves, including cleaning and commercial rent collection, saving £400,000 a year.
  • Using the Department of Health’s retail model for the delivery of community equipment. Service users will be issued with a “prescription” and can exchange this for the item of equipment prescribed through accredited retailers - saving £200,000
  • Increased use of personal budgets for the delivery of care services and continuing the reablement service, saving £750,000
  • Streamlined management arrangements on environmental contracts services saving £850,000.

What can residents do to help save the council money?

We have done a lot of work to improve our administrative processes for staff and residents.

My eAccount provides a quick and efficient way for residents to do things online, such as reporting faults or paying bills. It also reduces the reliance on staff to process these requests. This helps to keep our costs down. We know that not everyone wants to use the internet so it’s not the only way you can contact us.

Another way residents can help is by recycling more. We introduced compulsory recycling because it costs £80 per tonne to send rubbish to landfill but only £15 per tonneto recycle it. It’s also much better for the environment. The council can save many thousands of pounds each year if residents recycled more of their waste.

How much do you pay your Chief Executive and senior officers?

The chief executive’s salary was reduced by £50,000 when our new chief executive, Lesley Seary, started in June 2011. This is one of the lowest salaries for a chief executive in London and significantly lower than private sector organisations with an equivalent turnover.

All of our senior officers’ salaries are published online and you can see them here .  

The council is committed to reducing inequality and creating a fairer borough. That means reducing pay differentials, and the Islington Fairness Commission has published a report recommending that the highest paid council employee should not earn more than twenty times that of the lowest paid. We’re already well below this, with a pay differential of 1:11. We have also made a firm commitment to pay the London Living Wage of £8.30 per hour to all of our directly employed staff, and are looking to extend this to all our contracted staff where we can.

How does the council’s pension scheme work?

All council staff have the option to join the pension scheme and will pay between 5.5% and 7.5% of their salary towards it (depending on how much they earn).

Pensions contributions are defined nationally by the local government pension scheme (LGPS), though these contribution rates are subject to review following the recent government review led by Lord Hutton. The pension is currently based on the final salary, and the normal pensionable age is 65. You cannot start collecting your pension before the age of 55.

Other public sector schemes are slightly different. For example in the civil service scheme employees currently pay 1.5% - 3.5% towards their pensions, though this is under review too. The local government scheme is funded, meaning that the fund is invested so that it generates returns which will help pay for the pensions.

Central government has recognised the local government scheme as being different from other public sector pension schemes and they have agreed to consult separately on potential reforms.

Why don’t you collect all of your council tax?

Islington is a borough with a high level of deprivation, which normally means that collecting council tax is harder. By March 2011 we had collected 95.5% of council tax due for the 2010/11 financial year. That was our best ever collection rate in Islington and above the inner London average of 95.1%.

If people don’t pay we always take appropriate action to recover this money - including legal action if necessary. At the same time we want to help people in difficult financial circumstances to pay their bills rather than just taking punitive action, so we will often agree repayment schemes with them. We would normally expect to recover 97% of our council tax by the time we have taken recovery action.

Collecting debt is a problem for both public and private sector organisations. Regardless of the action that we take to recover it, it is almost impossible to recover it all.

How can I find out more about what the council spends its money on?

There are more details elsewhere on our website on where our money comes from and how it is spent, and we publish all of our transactions over £500 on our website every month. You can view these pages by clicking here

The Council meeting where the annual budget is set is held in February and is open to the public. Papers are also available online in advance of the meeting or a hard copy can be requested from Democratic Services. You can see our committee papers here