Long read: Camden's public spending challenges - 2017 and beyond

The Budget debate on 27th February at Camden Town Hall also includes a review of the Finance, Technology & Growth portfolio. Here I set out my full report in advance of the meeting. It details how the council makes its budget for the 230,000 residents of the borough and how we balance the books in the light of severe and continuing government cuts.

Tackling inequality through housing, good schools and community services have been hallmarks of successive Camden Labour administrations throughout its last 50 years, as has our desire to see the benefits of economic growth shared equitably and transparently invested for the future.

This year will see some big decisions (e.g. proposed rise in Council Tax, a new waste contract, adult social care changes) in order to balance the books. We will also see the continuation and completion of projects and initiatives which are making a real difference; like more council homes, better school buildings and further digital transformation.

Funding for public services

The Finance settlement set out the core funding for 2017/18 and is designed in the context of the overall Spending Review package, announced in 2015. It outlines key financial themes the government is proposing that will have the most impact on local government funding for the rest of this Parliament. The Finance settlement has therefore been used to indicate the scale of the cuts to local government funding until 2019/20.

Due to central government cuts, by 2018/19 our like-for-like funding will have been more than halved compared to 2010 levels. This is equivalent to an entire year’s combined spending on homelessness, adult social care, waste and cleaning services, parks and sport. Our analysis of government-defined ‘spending power’ shows that between 2010/11 and 2019/20 Camden will suffer the 7th highest cut in funding in the country (measured as £ decrease per household).

Year-on-year cuts to our resources have a cumulative effect on our resources, as since 2010 we have cut an average of £24m a year from our budgets. In the course of the current financial strategy, we made budget reductions of £30m in 2015/16, a further £23m in this financial year and expect to make further reductions of £24m to deliver the remaining agreed savings.

Capital investment for housing, schools and infrastructure is another major priority now that the government only funds 2% of our capital spending.

Chart 1 — Percentage Decrease in like-for-like Government Funding to Camden since 2010/11* Change in like for like external General Fund funding: e.g. excludes funding for new services like Public Health Grant for new service from 2013/14, and ring-fenced schools funding. Figures are projected from 2018/19.

Balancing the budget

Camden has already delivered a budget reduction programme that reduced spending by £93m between 2011/12 and 2014/15. In response to further cuts to the government funding, and various inflationary, demographic and other pressures on the council, we agreed a £78m budget reduction financial strategy to be delivered on our four year strategy between 2015/16 and 2018/19.

We are now at the end of the second year of the four-year strategy. The council has made strong progress towards implementing the savings and has reduced its budgets by £30m in 2015/16 and £24m in 2016/17. Despite the good progress there remain significant challenges for a number of savings to be delivered in 2017/18. £5.15m of savings that were originally agreed to be delivered in 2017/18 will be delayed by one year. This includes increasing income from advertising, savings from implementing a new HR and Finance system, and a number of projects within Adult Social Care that have suffered from challenging demographic pressures that have increased demand and costs. The delivery of elements of these savings will be delayed until 2018/19.

The future

In October 2016, the Council accepted the Government’s ‘settlement offer’ set out in the last Local Government Finance Settlement. This proposed to fix some elements of our grant funding for four years (2016/17 to 2019/20), allowing councils to have more certainty for future years.

We have already started planning beyond the financial strategy and currently forecast that we will have to deliver a further £25m of budget reductions by 2021/22. However, this forecast is subject to change as the full implications of certain factors such as, the EU referendum result, and business rates reform become more apparent.

Implementation of Outcome Based Budgeting

The scale and aggregated impact of the cuts will make it increasingly difficult to continue to offer the same range of services residents’ value and need. In 2014 the council adopted a new Outcome Based Budgeting programme that ensures we invest in the things that have the most impact. Some local authorities facing similar financial challenges have chosen to adopt and maintain annual reductions to budgets across the board. In contrast, Camden has chosen to maintain a focus on improving outcomes despite the on-going challenges of reducing resources. This approach allows Camden to effectively plan and manage the required changes in a structured and strategic way.

The Financial Strategy has been shaped by the core objectives of the Camden Plan, which sets out our ambitions to address a range of challenging social issues, while continuing to deliver high quality services for local people. Measures of allocated resources were based on a rigorous assessment of how individual projects meet Camden’s four investment tests, which are consistent with the objectives of the Camden Plan:

  1. Does the project tackle inequality?

2. Is spending focused on outcomes?

3. Is it preventative?

4. How effective is the project?

This approach to responding to the financial challenge has proven to be effective in the delivery of the Camden Plan outcomes and has led to improved service outcomes that have made the biggest difference in the lives of residents in the Borough.

Examples of how our financial strategy has improved service outcomes

Housing Allocations

We’ve moved more children from overcrowded homes. Through the new scheme we’ve increased the proportion of children rehoused from overcrowded housing by 38% (309 to 504), of which over half were moved from severely overcrowded homes (33% increase). We have also housed more residents with severe health conditions and made more housing offers to pregnant women and nursing mothers.

Customer Access and Camden Account

The Camden Account is a platform for common council transactions such as making payments, reporting missed rubbish collections, set up and pay their council tax account, view and comment on local planning activity, and manage parking permits.

Library Service

Our new ‘open access technology’ enables residents to borrow books, book a PC, do printing and more using the self-service system.

Housing revenue account

Up until 2015/16 the council had been utilising rent increases, in line with previous Government policy, to deliver a sustainable asset management strategy, clear the better homes investment backlog and provide an ongoing planned maintenance programme. Legislation passed by Government as part of the Welfare Reform and Work Act has, since April 2016 imposed rent reductions of 1% to at least 2020 resulting in the need for savings to be identified simply to balance the HRA Budget. In addition, other directives included in the Government’s Housing and Planning Act (2016) could significantly increase medium term budgetary pressure on the HRA.

The Council is required to agree a balanced HRA budget for each year. Budget pressures of £17.9m were identified over the next 3 years. After we identified savings, there was a £13.5m budget gap to be addressed by 2019/20 as part of our medium term finance strategy. This includes a £3.2m budget gap in 2017/18.

Value for money remains a key priority for residents and a number of proposed budget savings and additional income streams have been identified as part of a medium term financial strategy for the Housing Revenue Account. The council’s HRA Strategy agreed by Cabinet in January 2017 will deliver £1.4million more than the current estimated budget gap by 2019/20. As there is a good deal of uncertainty regarding the exact level of budget pressure in future years, planning for additional savings will ensure that the HRA remains financially stable in the event of the financial implications of government policy being more severe than estimated.

The Department for Communities and Local Government published its Housing White paper this month and whilst we welcome the shift in rhetoric from government to supporting a range of tenures, including institutional private rent, there are few concrete commitments. We still need to retain more right to buy receipts, more flexibility on their use and additional HRA borrowing headroom.

Council Tax

We have proposed an increase of 4.99% to council tax to respond to confirmation that core funding from government will continue to decrease significantly throughout the parliament, demographic changes including population growth, and increased demands and cost pressures to public services. This increase will ensure that we continue to deliver the Camden Plan and support the most vulnerable people in our communities. It is important to note that the increase is made up of two parts:

- the Council Tax element of 1.99% (which is the same as last year) following confirmation that core funding from government will continue to decrease significantly throughout the parliament, and

- Adult Social Care Precept of 3% to support the Council in its response to the unprecedented demographic and demand pressures facing adult social care.

The decision to raise the Council Tax has been made with careful consideration about the need to maintain public services. In 2017/18 alone, the combined effect of rising costs and falling income is over £22m, with a further £17m to be found in 2018/19. The proposed Council Tax increase which includes the 1.99% core and 3% precept will raise around £5m next year.

London Councils analysis suggests there will be a cumulative funding shortfall in Adult Social Care across London of at least £800 million by the end of this Parliament as councils deal with inflation, new burdens and the growing number of people qualifying for state-funded care. Raising the Adult Social Care precept by 3% will allow us to collect almost £3m more income, which will be fully allocated to Adult Social Care. The measured rise in the precept will enable us to partially mitigate the pressures from the funding shortfall, and ensure that our most vulnerable residents continue to have access to vital services.

Reforms to Council Tax

Whilst proposing an increase in Council Tax, we have made a series of changes to how we run Council Tax in Camden to make the system fairer. In December 2016 we increased the maximum value of Council Tax Reduction for working age claimants from the current 91.5% to 100% from 1st April 2017. Over 15,000 working age households in Camden will benefit from these changes, and approximately 12,000 of the poorest households will be lifted out of Council Tax altogether. We are able to implement this policy by redistributing the increasing Council Tax base.

Other steps the council has taken to improve the fairness in the system include charging 150% Council Tax on all long term, furnished unoccupied properties and giving 100% discount to Camden foster carers. This will contribute to the council’s goal to reduce child poverty in the borough by reducing the financial burden of 6,747 families, including 13,661 children.

A breakdown of the number of households per ward who will benefit from this change is set out below.

Welfare Changes

Working with the Cabinet Member for Equalities and Employment, we continue to monitor and mitigate the impacts of the Government’s welfare reforms. Over 1300 households continue to be affected the Bedroom Tax, 68% of which are council tenants, and over 380 households have been affected by the reduction in the benefit cap before Christmas.

Camden provides a range of advice and financial support to people affected by the welfare changes. The Council is on track to award approximately £1m in discretionary housing payments to avoid homelessness and £400k in crisis payments and furniture grants for those having to move. Our support for council tenants affected by the bedroom tax has ensured that no-one has been evicted as a result of the reforms.

Fairer Pay

Low pay and disparities in pay have been a continued focus for Camden. The current financial strategy invests £3million in implementing LLW and improving conditions of workers in homecare contracts. Since July 2012, when the council’s policy on LLW was agreed by Cabinet 314 contracts in excess of £100k (for the term of the contract) were awarded of which 310 were inclusive of LLW. Work is continuing with suppliers to ensure the application of the scheme through 2017, and during 2018 for the remaining four (residential / nursing care). In July 2016 over 150 staff working at two care homes with nursing (Maitland Park and Wellesley Road) which also included an extra-care sheltered scheme (Gospel Oak Court) started to receive the LLW.

We have taken the lead on gender pay reporting recognising that shining a light and closing gaps in pay can increase efficiency and productivity and help to attract the best employees, reduce staff turnover, increase commitment and reduces absenteeism. We are glad to say that our pay analysis, which is freely available on our website, does not show the huge inequalities that some sectors of the UK economy display. Camden council is not perfect and there is work still to do to align pay scales and conditions that differ between new and long-serving staff, but we’ve made progress.

We’ve also refreshed our resourcing strategy building on Timewise and flexible working. Our HR and Resourcing Advisors have been trained on flexible job design to help managers create roles and services that offer more flexible working. We are also exploring ways we can expand our candidate pools and attract more candidates from BME backgrounds.

We must go further than the legislation to achieve genuine progress. By shining a light on any disparity in pay you are acknowledging that there is an issue and you can then begin to talk about how to fix it. All employers should do this.

Transforming the organisation

In April 2016, following Cabinet approval in January 2016, we implemented a new corporate structure for the organisation. This is not only set to realise circa £2 million of savings through a reduction of approximately 20% of the most senior managers in the Council but it will support our focus on outcomes for residents. The Council will operate in more integrated ways across services, across organisation boundaries and with a clearer focus on early intervention and prevention which is the ambition at the heart of the Camden Plan.

It is a real expectation that senior leaders will support the organisation to adopt new technologies in order to offer a high performing, more responsive integrated service for residents. Coupled with this the new streamlined structure will give officers greater autonomy, increased self-sufficiency and enable faster and more effective decision-making closer to the frontline.

This year has also seen the introduction of a new approach to managing performance, moving away from retrospective measurement against objectives to a future focused approach on achieving individual, service and organisation priorities. This is aligned to the Camden Plan objectives and has allowed individuals to have a greater say in what and how they do things aligned to priorities. The recent results of the employee opinions survey show upwards of 88% of respondents understand how they contribute to delivering against the Camden Plan objectives and whilst it is acknowledged that there is more that can be done, this is a positive indicator in relation to how ‘My Performance’, the new scheme, is contributing to the transformation of the organisation.

Making every pound work harder and generating income

The government has announced that it plans to allow local government to retain 100% of business rates by 2020 and, earlier this year, it published the Local Government Finance Bill 2016–17, providing a framework for the reformed business rate system. The Bill is enabling legislation, with much of the detail needing to follow in secondary legislation. I am therefore not in a position to answer whether Camden will be a beneficiary of the new plans.

We welcome the flexibility for local authorities to shape the operation of business rates in their areas, to enable the Greater London Authority and mayoral combined authorities to impose a levy to fund infrastructure expenditure on projects that will promote economic development. Another welcomed element of the bill is that it starts to address some of the major downfalls of the current system, such as the impact of appeals, and signals a move towards central management of appeals.

The council has a long held belief that local government should have greater financial autonomy and that we need to move away from a local government finance system that is heavily centralised and controlled by Whitehall. We believe the bill doesn’t go far enough in this area, and fails to address some of our key concerns, such as the need for an increased autonomy on setting rates. Control of discounts, reliefs and annual increases in the business rate multiplier cannot be decoupled from meaningful business rate devolution. Control over these elements would allow the council to be more ambitious in granting reductions and reliefs to businesses and allow us to promote and shape economic growth and achieve social objectives in the borough. For example, devolving these powers would allow councils to better address business rate avoidance and reoccupation of empty properties.

We also believe that the funding reform should go beyond business rates and include further fiscal devolution. We are working with partners on building a case for wider devolution to London government and to the boroughs so that we can deliver more effective public services to our local businesses, residents and communities.

There remains a lot of uncertainty around the new roles and responsibilities the council will get in exchange for increased rate retention. Camden is ambitious and welcomes the prospect of additional responsibilities that will follow from increased retention of business rates. These new responsibilities should support local authorities to generate economic growth, deliver cost efficiencies and/or improve outcomes at the local level, such as employment and skills.

The government has indicated that they will shortly publish their response to the consultation on 100% Business Rates Retention, which was published in July 2016 and which Camden responded to. There will also be a technical consultation on options for how the new system should be best implemented.

London Finance Commission

In July 2016, the Mayor of London reconvened the London Finance Commission to ask London’s businesses and public sector organisations to share their views on the tax and public spending powers London needs. The Commission welcomed our suggestions which included, removing a ceiling on council tax bands and greater discretion in relation to charges for empty homes to address the chronic local housing shortage, as well as introducing a ‘London tourism’ or hotel levy. We proposed that a ‘London tourism’ or hotel levy could generate funding to cultivate more tourism and enable co-investment in skills provision that would improve firms’ productivity, increase the number and quality of apprenticeships in the sector, and develop clear progression pathways for low-income workers. The LFC recommended that central government work with the GLA, London Councils and other local authorities to consult on the potential operation of a tourism levy and devolution of the power to set such a tax in the city.

Increasing commercial income — Maximising use of property assets:

HRA Commercial property income is currently £7.6m, it is estimated that rent reviews could see a one off contribution from backdated rent of £0.2m by 2018/19. A review of the commercial portfolio is currently being undertaken with the option to increase income from the commercial property portfolio to maximise commercial income in line with the current market, and to identify underutilised assets that could be converted to commercial use.

Camden’s increasing popularity with flexible workspace providers means that there is potential for us to deliver our Camden Plan objectives at the same time as generating good rental incomes for the Council. A great example of this is Phoenix Court in Somers Town where a tech investment company, LocalGlobe, will set up their headquarters in underused and tired Council offices. Responding to our brief for the space, LocalGlobe will provide SME incubator space and a range of local benefits, as well as considerable investment in our asset and a rental income of £100k per annum.

The new strategic relationship with the voluntary sector which includes maximising the use of our property assets has progressed well during 2016. Part of the strategy focuses on formalising terms of occupation of Council properties for our VCS tenants and Strategic Partners. This relationship reflects the value that the Council places on the voluntary and community sector (VCS) charities operating in Camden.

Focusing on the objective to maximise the use of property assets, including the 101 Council-owned premises occupied by the VCS, will improve the delivery of services and encourage sharing of space. The long term support for 23 Strategic Partners is the first step in a closer working relationship, looking at how connections both inside and outside the Council can be enhanced.

We recognise that these are difficult financial times for the VCS as well as the Council, and each organisation will have to ensure that they get the best use of, or income from, their premises. This could be through accessing external funding to provide more activities or services or by hiring out space either for events or to smaller charities or groups with a similar ethos. For other VCS tenants that were previously in receipt of rent relief, the Council is providing transitional support for three years, but from 2020 each VCS tenant will be liable for rent.

Income Generation — Digital Advertising

As part of the Medium Term Financial Strategy 2014 there is an aim to generate income for the Council from digital advertising to reduce further cuts to frontline services. A target of £2.5m of additional income is forecast to come from the installation of digital advertising on screens, bus shelters, and council information points for delivery, subject to planning approval, between 2017–19. Advertising on lamp column banners and waste vehicles is already generating revenue.

We are in the process of identifying any suitable Council-owned assets where digital advertising could potentially be located. Transport for London are facing large budget cuts by 2019 and are therefore seeking more opportunities to generate income from digital advertising. Camden has begun discussions with TfL for a potential local agreement partnership to generate digital advertising income for both organisations.

Shared Digital

The Shared Digital Service brings together staff in ICT across Camden, Islington and Haringey to deliver value for money, consolidate expertise and best practice under a single integrated and high-performing service. It also creates a public service organisation structure that is resilient, and able to better withstand market conditions. Work is underway to pull together the portfolio of digital and ICT work that is being transitioned to the Shared Digital Service, and to ensure that it is focused on delivering to the political priorities and business needs of the three councils.

Environment Services contract

Camden’s new Environment Services contract will deliver recycling, waste and cleansing services in new and improved ways; focussing on increasing recycling, maintaining a clean environment, increasing business waste revenue and supporting the local economy. The services within the new contract will be far more responsive to the needs of the borough and its residents. New technologies will provide customers with up-to-date service information. The 8-year contract will encourage innovation and the use of technology to boost service quality and efficiency, and deliver savings of £5m per annum.

Digital Strategy — anticipating the impact of digital change

The Council’s plans for harnessing digital technologies are set out in the Digital Strategy which we published in April 2014. Through 2016/17 in addition to establishing and being part of a newly formed Shared Digital service Camden continues to lead and innovate on Digital services which continues to enable savings as well as delivery the outcomes of the Camden Plan. Work is also underway on refreshing Camden’s Digital Strategy and its approach to digital and data by embedding the digital outcomes as part of Camden developing the next iteration of the Camden Plan.

Open data & analytics

Through harnessing modern analytics and business intelligence technology, we continue to develop further dashboards spanning Council Tax and Business Rates, Engineering Services, Sports Corporate Information Governance Group and Procurement. The dashboards continue helping the Council to deliver savings and ensuring that scarce resources are directed for maximum value. Our open data platform has enabled a number of service led innovations which have led to amongst other successes enablement of around £200k annual savings by enabling the council to stop sending adjoining occupier letters for planning applications. We now have over 281 data sets in our Open data platform and remain one of the few Council’s to have an Open Data Charter which commits the Council to publishing all its data online unless there are good reasons for not doing so.

We hosted an event as part of the London Tech Week 2016 to consider the power of data in reforming public services. The successful event had representations from across government and leading officers around data including the former Chief Analytics Officer for New York City, Innovation director from NESTA, the Greater London Authority (GLA), and the Government Digital Service (GDS).

Currently we are working in partnership with GLA and NESTA on a London Office of Analytics pilot project that brings together over 14 local authorities to demonstrate that performing data analytics on datasets sourced from multiple local authorities and public sector bodies can help reform public services in the capital. If successful, the pilot will pave the way to create a permanent London Office of Data Analytics.

Online services

We have continued our focus on transforming customer experience by expanding the Camden Account with new services, automation and streamlining high volume transactions as well innovation in the telephony channel. The Camden Account now provides a personalised point of entry for the Council’s highest volume transactions and last year we hit a milestone by getting over 100,000 residents online allowing customer service officers time to be freed up where its most needed.

Connectivity

We continue to work with our business partners on improving access for businesses to high speed broadband and mobile services in the Borough. We are one of the first boroughs to benefit from a trial rollout of ultrafast broadband and upgrades to the current infrastructure. We also remain on track to deploy free Wi-Fi and recycled equipment into all 74 Tenants and Residents Association (TRA) Halls to support digital inclusion initiatives. The 1st batch of leases to install telecom equipment on Council residential blocks has been completed. The leases will generate income of circa £500,000 per annum; the installations will also improve connectivity to the residential blocks. We are currently working on the 2nd and 3rd batches of leases from which the Council will obtain additional annual income that can be reinvested in Housing Revenue Account.

We have been working closely with operators to improve digital connectivity for businesses in Camden, particularly in the south of the borough where connection speeds are slow. BT attended the January business board and provided an update on the progress of its current fibre rollout plans, increasing coverage to 17,000 additional premises. BT has also announced a kiosk replacement scheme in partnership with LinkUK. The new units will offer free 1Gb WiFi and phone calls, and a range of other free digital services. BT hopes to begin its national rollout in Camden, with the first units expected in quarter 2. 32 leases have been concluded with mobile and alternative broadband operators to lease rooftop spaces on council owned buildings.

Smarter Working

In addition to the above a Smarter Working programme is also underway which helps deliver ambitious goals of the Camden plan by making better use of technology, this includes the rollout of a new improved, combined HR and Finance system and a new intranet and easier document sharing and storage solution. Work will continue over the coming months to progress on the challenging yet ambitious programme of work and continue further progress and development of the Shared Digital Service.

As part of our commitment to improving diversity and engagement in senior roles in ICT we participated in a Digital World programme called ‘Socitm — Empowering Women’. We are also participating in ICT Graduate programmes, as well as promoting apprenticeships. In the wider London context Camden is currently hosting the Local Digital Coalition that brings together various digital leaders in public services group Socitm, the council chief executives organisation SOLACE, LocalGovDigital, iNetwork, iStand and others. The groups will work together to help public services in England unlock the benefits of collaborative digital service transformation.

Growth

Creating the conditions for growth and harnessing the benefits for local people remains critically important to Camden, particularly in the light of the on-going uncertainty about the economic impacts of Brexit. Camden has seen strong economic growth of almost 20% since 2009 — higher than the UK and higher than London overall. We are home to 29,000 businesses and 350,000 jobs, representing 7% of all employment in London and contributing 2% to national GDP. We have a higher proportion of large businesses by turnover than London or the UK and the third highest number of business start-ups per year in London.

New investment

Much of Camden’s success is attributable to our identified growth sectors which include professional, technical and business admin, the creative industries and of course science and tech. We’re fortunate to have some big name businesses head quartered in Camden — Google, Universal, Arup, ASOS, Grant Thornton, Viacom, Warner Bros, to name a few. Two of those — Google and ASOS — have made recent high profile announcements committing to creating 7,000 and 4,000 jobs respectively in Camden.

Large businesses such as those described, are anchoring their sectors in the borough and are attracting a plethora of smaller businesses that seek to contribute to the supply chain, contribute to innovation, and collaborate and grow. More than 90% of the businesses that make up the professional and creative sectors employ less than 20 people.

BIDs

Camden is also fortunate to have strong business networks with six Business Improvement Districts representing 1,600 of our businesses. This year, Camden supported the establishment of our two newest BIDs in Hatton Garden and Hampstead. Our BIDs and our growth sectors are represented on the Camden Business Board through which we manage our strategic relationship with business — a relationship that will be particularly important as we head into very uncertain economic times. This year we have worked with the Camden Business Board to review the Business Charter which sets out our commitment to business and in the coming year we will deliver the third Camden Business Awards and re-run the Camden Business Survey.

Knowledge Quarter and Med City

We have been furthering our relationship with the Knowledge Quarter partnership, which brings together a world-class concentration of knowledge-producing institutions and businesses within a mile of Kings Cross. We have also deepened our relationship with MedCity, an inward investment agency focussed on health tech and life sciences. We know that MedCity have some exciting plans for promoting life sciences in Kings Cross.

In 2016 MedCity published a report that outlined the demand for real estate to support the booming life sciences sector focussed around the Francis Crick Institute and the Alan Turing Institute. This is an exciting opportunity for Camden to be at the heart of what the government’s new Industrial Strategy identifies as ‘nationally significant activity’. These activities create amazing opportunities for our school children to get work experience, support the take up of STEAM subjects, and encourage local residents to access high quality apprenticeships and jobs.

Camden also continues to ensure that the benefits of growth and strong business networks are harnessed by local residents. Over the past year, we have prioritised the high numbers of people who are out of work as a result of a health condition. The Camden Ability Network, has worked with local businesses to promote inclusive workplaces and help them to become confident in employing people with health conditions.

Brexit

In the aftermath of the decision to leave the EU, we initiated a discussion with the Business Board to understand the key issues. In September 2016, we wrote a joint letter with the Camden Business Board and the Knowledge Quarter partnership to the Secretary of State for Exiting the EU. The letter outlined our concerns regarding the potential impacts of Brexit. Our concerns included the need to ensure that our growth sectors and our cultural institutions and attractions can continue to attract and retain the talented and skilled workforce that they need. It also included terms of access to the single market and continued investment in critical infrastructure.

In addition, the CBB have agreed to provide resources to a communications and marketing plan branding Camden as the best place to do business — a national/global hotspot for growth and investment. We plan to better use the Knowledge Quarter as an ambassador for Camden. We intend to celebrate the success and reputation of the borough as a positive place to live and work, and capitalise on employee pressures to locate in good places. We will also explore how Camden can be at the forefront of an embedded technology world, using Camden’s position as a centre for digital transformation to explore a consultative conversation with service companies, offering advice on public sector needs in exchange for more/better support.

We will work within the Mayor of London’s “London is Open” message, presenting Camden as central, global, diverse, responsive, and open for business and Camden’s new Brexit working Group on this critical issue.

Lending

This year we have reviewed the Council’s investment in Funding Circle, the peer-to-peer lending platform which invests in high-growth SMEs. We will be taking management of our portfolio in-house in order to keep up with the demand from local businesses and ensure that we are getting the most leverage on our investment.

Since October 2013 we have successfully completed 58 loans to Camden-based businesses totalling £141,114. This investment has helped lever in a further £3,723,426 of private sector funding. Growth sectors and important industries such as, retail, tourism, and construction have been the greatest beneficiaries of the scheme, receiving over 70% of the total loans.

Workspace

Premises suitable for SMEs are under pressure from rising residential land values and housing demand/targets, limited land availability and permitted development rights. Since his election, the Mayor of London has acknowledged this issue and the role of public authorities in ensuring the supply of workspace. The Mayor is considering greater protections through the London Plan and encouraging affordable workspace provision on large schemes. We know that there is a significant amount of commercial floor space growth in the development pipeline in Camden, but the majority of this is large floor space and corporate office space at Kings Cross and Euston, which is designed and priced for large occupiers. It’s also about securing the specialist commercial floor space to support our key growth sectors; from wet labs and data centres to jewellery workshops.

The Council aims to ensure the supply of SME workspace through our planning levers, through better use of our own assets, and through lobbying and influencing in partnership with business. We use our planning levers to encourage and secure SME space through mixed use development. Good examples include Base KX at 103 Camley St and more recently, the provision of discounted space to be marketed locally at a scheme in Spring Place, Kentish Town. This year we have also used our planning policy to secure jewellery workshop space in Hatton Garden and S106 contributions to refurbish space and bring it back into use by jewellery makers. The Economic Development team have been working with Placeshaping colleagues to strengthen the provisions of the emerging local plan on this issue.

New and improved employment space will be delivered through CIP projects. This year has seen the completion of refurbishment work at Burmarsh Workshops in Gospel Oak, associated with the Bacton Low Rise development and these spaces are filling up with caterers, artists, designers and photographers. At Maiden Lane, the ground floor business space has been marketed and negotiations are ongoing with tenants that will support SMEs and provide other local economic development benefits in exchange for discounted rent. We are also developing our vision for the redevelopment of our interests in Camley Street. This will include a range of employment space types and sizes, and we will aim to prioritise space suitable for our growth sectors, particularly science and tech.

We continue to work with the Business Board and sub-regional bodies like the West End Partnership and the GLA to lobby Central Government with regard to issues such as office to residential permitted development.

STEAM Commission

This year we launched the Camden STEAM Commission, which brings together Camden businesses and local schools to support more of our young people towards careers in Science, Technology, Engineering, Arts and Maths. We had a strong response to our call for evidence from schools, regional authorities and businesses and employers — including the Francis Crick Institute, Facebook, Google, Arup and Viacom. A report on the STEAM Commission will be launched in 2017 with recommendations that will focus on how to take advantage of the wealth of employment opportunities these growth sectors offer.

Apprenticeships

The Economic Development service negotiates with developers investing in Camden to deliver supply chain and employment and training opportunities for local business and residents via S106 agreements. Since the beginning of the Camden Plan timeframe (2012), legal agreements have been signed securing:

• 677 construction apprenticeships

• 19 end-use apprenticeships

• More than £2.5m towards employment and training initiatives

• 391 work experience placements (mostly construction)

• 20% local recruitment or, since October 2015, local recruitment in line with CITB benchmarks on all major sites; and

• 10% local procurement on all major sites.

Achieving efficiency savings through the accommodation strategy

The Council’s Accommodation Strategy has continued to progress in 2016/17. The move to 5 Pancras Square continues to generate positive outcomes. The building has achieved a BREEAM Outstanding rating, and is one of the most sustainable buildings of its type in the country. It also received a CIC — Inclusive Environment Award 2016. It has helped to secure carbon savings of 44% when compared to the buildings that it replaced, reduced operational costs, significantly increased energy efficiency, while continuing to promote and encourage flexible and collaborative working amongst staff and services.

Town Hall modernisation

As part of the accommodation strategy, Cabinet approved the business case for refurbishing the Camden Town Hall in September 2016 and the procurement strategy in December 2016. Overall the aim is to restore the historic Town Hall, create new employment space and generate funding to support the investment in light of the major financial challenges facing the Council.

The project will see investment of some £29m in building infrastructure to ensure the long term future of the Town Hall as the Council’s main democratic and civic building. Income of £2m p.a. to support the investment is anticipated together with running cost savings of over £800k p.a. To deliver these financial benefits surplus space on the 2nd and 3rd floors of the Town Hall will be refurbished for business occupation with space for small and medium enterprises (SMEs) created in the basement. Whilst complying with the Council’s legal duties to secure best consideration the marketing strategy for letting of these areas will be geared to Camden’s economic development priorities and growth sectors (including creative industries, science and technology).

Following procurement of the development and construction contractors during 2017 planning permission will be sought in the first half of 2018. Subject to obtaining planning permission work will start on the Town Hall in mid-2018 for a period of just over two years with the building work being completed in autumn 2020. During the works period the Council’s democratic and civic functions together with services currently located at the Town Hall will be relocated to the Crowndale Centre with suitable remodelling of that building taking place during 2017/18 in preparation. The project will enable the Council to generate circa £2.5m annum income from refurbished office and restaurant/leisure space.

Camden centre

The Camden Centre will also be offered for commercial leasing due to the significant financial advantage of this option in comparison to operating through the Council. This option is also preferred based on the fact that the great majority of current lettings are for commercial and business users rather than community groups. Although community use of the Camden Centre is small compared with business hire we recognise that it has provided a venue for a number of valuable, long standing community events. We have therefore provided transitional funding to assist in locating alternative venues or formats to support the continuation of the most important community events.

Using public assets to support spending

Other projects include; letting of the Eley Road depot site which has recently become surplus to operational requirement and can generate an annual income of £125k; Liddell Road which is to go on the market in the 2nd quarter of 2017 for freehold disposal for residential purpose, to create employment space which can generate an annual income of up to £1m or disposed of for capital receipt; 5PS — we are currently in discussions with the Camden CCG exploring the option of them occupying part of the building for annual rental income and contribution to the cost of business rates and utilities for the building, this could be up to circa £1m per annum. CCG’s occupation of the building will ensure continued close working with Council health and social care colleagues; Maria Fidelis School site which is to be let for an annual income of up to £150k when it becomes vacant in early 2019.

Holborn library

A developer has been selected as the preferred bidder to redevelop and modernise Holborn Library, adjacent properties on Theobald’s Road and the Cockpit Yard site. The creative and innovative solutions proposed for the public facilities, and improvements to the public ream and new housing will enliven an underutilised site. New and improved library, archive, depot and workshop space will be delivered along with affordable and market housing providing much needed financial benefits for the Council.

Community consultation and engagement events will be held throughout 2017 to inform and shape the proposals through to a formal planning consent. This is a complex project, with many important factors to consider in agreeing the design of the Council’s facilities, and planning how it will be constructed with the least disruption to local residents. We have therefore taken the time to review these to make sure the developer has a strong plan for the site before we enter into a contract and proceed to a planning application.

156 West End Lane

In November 2015 we exchanged contracts with A2 Dominion for the sale of the ex-Council offices at 156 West End Lane including the site occupied by Travis Perkins. Subject to planning permission this development will provide 164 units of new housing (85 private and 79 affordable, 50% affordable housing based on floor area) together with non-residential floor space (primarily flexible employment) and a £20m+ capital receipt for the Council to reinvest in public services.

Rebuilding Capital Investment — Community Investment Programme

The council’s current capital programme stands at £1.4bn. Only 2% of the expenditure is set to be funded from government grant, with the programme heavily reliant on the generation of future receipts. These factors mean there are a number of significant and often interlinked risks in the capital programme that could impinge on the ability of the council to deliver its plans in full. The risks are particularly prevalent in the CIP programme, which aims to deliver an ambitious scale of social and intermediate housing and community assets, funded largely from the construction and sale of private units.

The state of the London construction market is a function of a complex mix of factors. The outlook for the construction sector in the wake of Brexit continues to be uncertain, with reports offering an often ambiguous or contradictory mix of views. While some commentators suggest the weakened pound could see increased activity from foreign investors, it will similarly increase import costs with the possible effect of escalating contract prices.

Council homes

425 new homes are due to be completed by the end of 2017/18. Delivery will accelerate over the next four years as we complete projects carefully developed with residents in the first years of the programme.

Schools

As well as building new homes we are investing in schools and community facilities. So far we have invested £61m through CIP to improve 48 schools and children’s centres and built a new building for Netley Primary School. The new St Pancras Community Centre opened last summer — a transformational improvement on the old centre that will allow the Community Association to thrive for years to come. This year we will open our second award winning facility for homeless people at Holmes Road transforming an old workhouse into a state of the art facility that will help people to live independently, develop skills and get their lives back on track.

Future challenges and risks

Business rates: The existing business rates retention scheme continues to be a large source of uncertainty for the council. This is largely due to the impact of appeals. There are currently over 2,800 outstanding cases of Camden business appealing against their valuation. The effect of appeals in Camden is that our rateable value (RV) is now slightly lower than it was when the system was implemented despite a high level of development in the borough. We have also had to tie up our resources in creating a large business rate safety net reserve (£63m at the end of 2014/15, reduced to £42m at the end of 2015/16, to be shared between the council, GLA and the government). Lastly, appeals meant that our medium term forecasting has proved difficult and volatile.

The revaluation of business rates in 2017 is also of great concern to Camden. We anticipate that the 2017 revaluation is likely to result in another surge of appeals, especially if the starting position for Camden is overstated, as it was in the previous valuation round. Bills on our own buildings will rise 23% — a £1.8m pressure next year. It is also expected to lead to huge increases in bills for Camden businesses. We have used our business communication channels to encourage businesses to ‘check and challenge’ their revaluation rate, and will continue to promote the government’s transitional arrangements and support.

Over the coming year, we will further consider the likely impact of the proposed retention of business rates by councils, the impact this will have on our relationship with business and the potential for using Discretionary Rate Relief policies to support growth. This is an area the London Finance Commission is also looking into. We will support Support fiscal devolution powers that empower London to develop a regional tax and spend policy that mitigates disproportionate impact in central London.

Population growth: Camden is experiencing a period of sustained population growth. Camden’s rate of growth is middling for a London borough, ranking 19th in London over the past 10 years (14%). Camden and London are forecast to continue to grow for the foreseeable future. Over the next 10 years Camden’s overall population is forecast to grow by 20,500 (8.5%). The older-aged population (65+) is forecast to grow by 24.4% (+6,800). That change is a significant one in terms of adult social care provision.

Brexit: The immediate economic response to the prospect of the UK leaving the EU has been less abrasive than perhaps anticipated. Apart from the pound sterling which responded by dramatically falling against the dollar immediately after the result, key economic indicators have shown that the UK economy has remained resilient. Nevertheless, many prominent economists expect that the long-term impact of Brexit will significantly affect the UK economy and will have huge implications for jobs, growth, and public finances.

The impact of Brexit on house prices and construction costs remains uncertain and this will continue as Brexit negotiations progress. As already mentioned in this report, the delivery of the capital programme, including the CIP, is heavily dependent on the generation of receipts from disposals and private residential sales — a strategy developed in response to the significant reductions in central government funding for capital expenditure from 2010 onwards. There is a risk that the property market could weaken with the volume of housing transactions and house prices set to fall at least in the short term. However, it is important to note that this is speculative at this stage — there is an alternative line of thinking that says that a weaker pound could attract more foreign buyers to London. We will continue to monitor the position in terms of the overall market and the business case viability on individual projects.

Perhaps a greater risk than unanticipated funding cuts in the short-term, are the potential effects of any spikes in inflation. In the Autumn Statement, the Chancellor set out expectations of increasing inflation, as weaker exchange rate has a material effect on the forecasts for consumer prices. The Office for Budget Responsibility has revised its forecasts for CPI inflation to 2.3% in 2017 (previous forecast was 1.6%) and 2.5% in 2018 (previously 2%). The rate of inflation in December — 1.6% — was the highest since July 2014.

Since 2011/12, the Council has only been allowing very small inflationary increases in its expenditure budgets as a means to manage reducing grant funding from the central government. High levels of inflation could mean that the relatively low allowances for inflationary pressures built into our medium term financial projections could prove insufficient. For example, for every 1% increase in contract costs, supplies and services, the council would have an additional £2.4m pressure every year, and over £12m increase in the budget gap by 2021/22.

Conclusion

There is no simple answer to the scale of government cuts and the continual change which public services will undergo over the next few years. Camden council will continue to make decisions in the best interest of residents, these will be sometime hard decisions but we will make them transaprently and always be open to change.

Resident satisfaction with how Camden spends money is at an all-time high, and gone up by 20% in last 4 years . By planning and investing for the long-term, we will try to avoid services in Camden reaching a tipping point while investing in the wide range of preventative services people need including affordable housing, jobs and care for the elderly.