THE release of Southampton council’s draft budget this week sparked a bitter war of words between the ruling Labour administration, their Conservative predecessors and the trade unions.

The plan for record jobs losses, service cuts and charge hikes, worth nearly £20m, to plug council’s biggest ever budget black hole, has descended into a blame game between the parties.

Finance officers are predicting even more pain to come in future years, with a chasm of up to £60m to fill over the next three years.

The Daily Echo today investigates the numbers behind the claims...

1. Unions this week claimed that “under Councillor Royston Smith’s [Tory] administration, the council’s capital programme was increased by £100m”. And they have repeatedly attacked the decision to spend money, building the £15m SeaCity museum and a new £21m arts complex, saying interest charges on borrowing have left the council less able to spend money on frontline services.

The capital budget includes money the council spends on improving or building new property, roads and other infrastructure, as well as what the council buys or sells in land, property or other assets.

The council has a four-year rolling spending programme which gets topped up twice a year with new commitments.

It is funded by grants, proceeds of asset sales and borrowing.

When the Tories came to power in May 2008 they inherited a budget set three months earlier by a Labour/ Liberal Democrat alliance. That budget hiked the capital spending programme by £70m to £206m.

It was revisited again in September 2008 when the Tories increased it by £24m, including £800,000 to demolish the Tyrrell and Green building for the new arts complex, £1.5m for a refurbishment of the Tudor House museum and £900,000 for the new arts complex.

In 2009 the programme was increased by £35m, including £10.4m for a new rubbish and recycling centre and £4.4m for a revamp of Guildhall Square.

The 2010 programme increased by £33m in February to include, among other things, £13.5m for the SeaCity museum. Later that year it was increased by £39m, including the purchase of a new office block, One Guildhall Square, for £26m and another £1.5m into the arts complex’s growing budget.

The following year £44m was added, included an extra £3m toward the £25m repairs of the Civic Centre.

In February the programme was increased by £9m, but with little spending planned in the fourth year, leaving Labour to inherit a £169m programme when they won power in May. Labour then increased it by £28.5m in September.

It all adds up, as the unions claim, to an increase under Cllr Smith of well over £100m, but given it is a rolling fouryear budget new spending commitments are always added each year.

The actual annual spending according to the council’s accounts was £79.9m in 2011/12, £93.2m in 2010/11, £54.4m in 2009/10, and £75.5m in 2008/9. There is little to support the union’s suggestion that Tories have been overly profligate.

The unions single out the £15m SeaCity museum for criticism. It was built to mark the 100th anniversary of the sinking of the sinking of Titanic and funded by the council to the tune of around £9m through asset sales and short-term borrowing – although the council hopes up to £5m will be clawed back through fundraising.

The council is also putting in £11m, including around £1m of borrowing, towards the £21m arts complex. The rest will come from grants (£7m) and fundraising (£2m). Yet for both the projects, the annual interest on borrowing, paid out of the annual general budget, will be hundreds of thousands of pounds rather than the missing millions implied.

2. Unions have criticised the previous Conservative administration for taking one-off Government grants to freeze council tax.

They say it has reduced “the ability of the council to raise revenue” and left the council with a larger budget gap.

The Conservatives have for each of the past two years taken grants equivalent to a 2.5 per cent rise in council tax, or £2m, to pay for the tax freeze.

But the Government has decided not to offer the same grant next year, leaving the council to start its budget planning with £2m budget gap compared to last year.

To freeze bills in future, the Government is instead offering funding worth a one per cent rise in council tax, or £800,000, for the next two years.

Southampton City Council has been budgeting for a two per cent council tax rise, which would leave the council with a budget gap of £1.6m over the next two years if it accepted the Government money to freeze council tax.

In opposition Labour accepted the council tax freeze grant in a shadow budget it put forward in February.

And the previous it year refused to publish any alternative plans out of protest at Government cuts.

Labour has decided to reject the grant offer for next year to avoid the council budget gap widening even further in future years.

3. The Conservatives have been accused by trade unions of spending the council’s reserves in the run-up to the 2012 elections in May. Labour’s finance boss Councillor Simon Letts told the Daily Echo they had been reduced to a minimum of £5m.

At the end of the last financial year, April 2012, the council reported it had total “usable reserves” – those that can legally be used to fund spending or reduce taxes, of £70m.

But the figures for truly “usable”

reserves for the council’s general budget – excluding those for schools, council housing, capital projects and other earmarked uses – were much lower at £23.5m. The same figure for last year was £17.4m. It was £19.8m in 2010.

Further budget planning, started by the Tories, will see the reserves drawn down this year to £7.5m by next April, and down to £5.3m by the end of the following financial year, April 2014.

4. Both Labour and the trade unions have blamed Government funding cuts for the council’s financial plight.

In October 2010 the Government set out a plan to cut council funding by 28 per cent over four years to help bring down the national deficit.

Cllr Letts has said a proposed 0.6 per cent cut for 2013/14, the third year of the cuts, is now forecast to become as much as 12 per for Southampton – or £12m.

The council will have to wait until next month to get the final figures but the huge increase in the funding cut cited by Cllr Letts compares two different figures.

The 0.6 per cent was a headline figure for all local authorities not the impact of the Government funding cuts on individual authorities such as Southampton, which varies widely.

Indeed a council briefing paper warns “a headline reduction figure of 0.6 per cent for 2013/14 would not translate into that level of reduction for (Southampton) council”.

Southampton saw its grant cut by 10.1 and 6.6 per cent in the first two years of the Government funding cuts.

Finance officers at the council had been planning for a seven per cent cut across each of the four years but recent Government announcements have led officers to assume an eight per cent cut next year, around £9.2m.

5. Tories argue that the cost of Labour restoring controversial pay cuts they brought in last July has cost jobs and money. The Tories said the full package of cuts to terms and conditions, around £6m, would have protected 400 jobs in coming years.

The unions and Labour have questioned that and point out that the cost of partially restoring staff pay next year, at £660,000, is the same as the Tories had set aside in annual compensation for a legal action that has now been dropped.

Redundancy costs at the council for the 238 staff who left during 2011/12, 61 of whom were sacked, ran to £6.7m, according to council accounts.

The previous year, 2010/11, 213 staff left the council with pay-offs totalling £4.5m.

Labour is planning to axe up to 327 staff next year with provision for £4m in redundancies.

It is clear that the pay cuts would have saved the council money, both in wages and redundancy costs, but that does not account for the other side of the coin.

A potential legal bill of £12m over the Tories’ pay cuts plan, an unhappy workforce and possibly higher staff turnover could have wiped out those savings. And the level of jobs the Tories claim they would have protected remains only a prediction.

6. Conservative group leader Cllr Royston Smith says his party had left Labour with a “£6.9m revenue underspend which has been used to help balance this year’s budget”.

That under-spend was carried over to balance the budget that the Conservatives themselves set in February this year, not the budget that Labour is now planning for in 2013/14.