Unitary debate: EDDC's case

PUBLISHED: 09:00 14 February 2009 | UPDATED: 10:29 10 June 2010

Regarding the letter last week entitled Appeal decision raises concern". As East Devon District Council's Portfolio Holder responsible for Resources, I would like to respond to Ms Budden's open letter, addressed to our Finance Director, Mr Diccon Pearse

Regarding the letter last week entitled "Appeal decision raises concern".As East Devon District Council's Portfolio Holder responsible for Resources, I would like to respond to Ms Budden's open letter, addressed to our Finance Director, Mr Diccon Pearse (he has responded direct to Ms Budden).Addressing Ms Budden's comments in order, I can assure her that the council is mindful of the costs involved in challenging the Secretary of State through court action. At all stages it has sought external legal advice on the matter before proceeding.As she rightly comments, actions of this nature are expensive and it is council tax payers' money that is being used to fund it. Here, I think, she needs to bear in mind what is at stake, to balance the cost of the court action against the costs that would be involved in amalgamating eight districts and a county into a single unitary council.In their submission to the Boundary Committee, the county council estimate the cost of setting up the new unitary authority to be £74.3m. They envisage that this sum will be offset by savings of £102.3m and that, after the five-year transitional period, annual savings of £18.7m will be achieved.This council considers that (amongst other defects) the Boundary Committee has not complied with the statutory procedures in carrying out its consultation exercise on a unitary solution for Devon. The committee did not consult on the affordability of the proposal, one of the five criteria set down by the Secretary of State.If one takes a step back from the legal challenge and looks at the affordability test (that is one of the five criteria referred to above), I am concerned over the approach taken. Remembering the new unitary council would not come into being until April 2010, the financial exercise has been based on estimates of income and expenditure approved by the constituent councils in early 2007, and on the level of reserves held at March 31, 2007.The financial consultants employed by the Boundary Committee have reviewed the assumptions and calculation of cost increases and savings contained within the workbooks submitted by the county council. In a number of cases they have taken a different view and have substituted their figures when testing affordability. Nowhere in this exercise, however, has any account been taken of changes in range, level, standard and cost of services that will have occurred since those budgets were prepared. They have simply ignored the effects of the 'credit crunch', which has been responsible for falling incomes and greatly reduced returns from investment income. In my view, the reserves and savings the county anticipate to pay for the transitional costs of a new unitary council will have already been used by authorities in balancing 2009-10 budgets.Turning to the £1.8m forecast deficit, the council's income from planning and building control fees, plus car parking income and investment returns, is forecast to reduce by £1.1m over that originally estimated for this year. On top of that, members have signalled their intention not to raise the council tax next year, in recognition of the financial situation, which would have produced a further £0.3m.On the assumption that income levels will return once economic confidence picks up, the underlying deficit in our revenue budget is in the order of £0.4m. The council will be using its reserves to meet the funding deficiency in 2009-10.Finally, with regard to the timing of events, the next council meeting is scheduled for February 18 and the Court of Appeal Hearing for February 18-20.Councillor Andrew Moulding.PS - The decision by the Government to delay the Boundary Committee's report until July 15 vindicates the position taken by the council. We are now taking legal advice on the impact this decision may have for our proposed appeal.

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