Description: Subtitled ‘Southwark -The Way Forward’, the film explains how pressure has been put on local authorities to reduce spending. There have been cuts in government grants, penalties for overspending and rate-capping. Southwark has used every legal means possible to protect services and protect the community. It has done this by increasing rates while it could, and by using financial devices. Time has now run out and Southwark has to pay its bills. Anne Matthews, leader of the council, explains that the council made the video to explain how the council has had to make hard decisions. Four years of rate-capping means that Southwark has to keep vital services going without money from the government. There is now a three-year financial strategy but any changes Southwark has to make will be negotiated and there will be no compulsory redundancies. Local government is obliged to balance what it spends with its income. In this financial year which will end in March 1988 this is what Southwark is committed in spending: biggest amount £103m is to pay off loans in capital spending programmes; staff costs of £100m; running expenses are £88m, most of which go on council housing repairs and running council premises; the last chunk is £44m which goes on housing benefits such as rent and rate rebates. Over half the households in Southwark receive some housing benefit. Total of over £335 million. Money coming is £160m government grants; £61m from rates; £57 million from rents. But Southwark is short by £57m. It can make up half of it by charging for some of the services provided by the government. It can make up the shortfall this financial year by capitalization – and will spread costs over future years too. But there is no room left for manoeuvre – the government controls how much in grants Southwark gets and how much it can raise on the rates. The biggest budget is Housing at £48m, and then social services £43.5m; Public services £25m; financial services and administration £15m; leisure and recreation £14m, other services £14m. It has to be paid for by the government block grant and the rates. This expenditure this year (1987/88) was paid for by £73m of government grant and £61m from the rates - £134m. That is the limit set by the government as it will not give any more block grant or allow Southwark to put up the rates further. It needs £160m, but there is a shortfall of £26m. In next three years expenditure will increase as government is committed to growth and inflation costs. However this expenditure has to be reconciled with the amount the government will allow the council to spend. The shortfall is going to get bigger, eg in 1988/89 the council will have to find a further £40m, just to balance the books. The options open to the council to survive are capitalization- a special accounting measure; an increase in council rents and staffing reductions. Capitalization is transferring the cost of revenue spending to the council’s capital account. This means that instead of using capital resources to improve the fabric of the borough they are being used for day to day running costs. Not a long-term solution and will have to be reduced. Next year it will be £20m, half the budget’s shortage, but by 1990/91 when the shortfall is £56m, capitalization will be £10m. The effects will be felt by those who work for the council, and by local people. Southwark spends most of its budget on housing and there are limited means on reducing the cost. Government housing subsidy plays a major role in financing expenditure. And if spending is cut back below a certain level it loses that subsidy. Council house rent is largest source of income after the government’s block grant. Income from the rates also has to be used and that contribution from rates to housing expenditure has been growing bigger. Without any further increase in rents, it would reach £60m by 90/91. Southwark has increased rent £3 per week each year for the next 3 years to help bridge the budget gap. This will reduce the debt by £27m by 90/91 and not all of that money will have to come from the council tenants themselves. Half of that will come from central government indirectly through housing benefits. Other costs that could be cut in the short-term are maintaining existing vacancy levels at 10% for manual worker posts and 17% for officer posts. By additional staff reduction of 3-5% per year for the next three years savings can be made to meet the existing budget shortfall almost completely. 250 – 400 jobs will go but by negotiating early retirement, redeployment and retraining hope to accomplish these changes. But Anne Matthews says they also face the threat of privatisation. Under the new local government laws Southwark will have to put refuse collection, street sweeping, catering, ground maintenance and general cleaning out to tender. Council will asks residents how to make these services better to stop them being privatised. These new laws and the poll tax will change all our lives but Southwark will always try to protect its services and be a good employer.