District Matters

Reviewing the budget

November 2022

Last month's column set out the economic backdrop which informs our thinking about budgeting. The outlook was not good. Not much has changed.

Against this backdrop we have started our budget process. We have a first draft Medium Term Financial Strategy which basically captures the as is' position with no changes. Using this as a base, we have initiated a 'star chamber' process where we go through every area in considerable depth. We review the budgets for each Head of Service area together with the relevant portfolio holder. The people acting as inquisitors are myself as Leader, The Deputy Leader, the Finance Portfolio holder together with the Chief Executive and Deputy Chief Executive. Each meeting can last up to three hours, so they are pretty thorough.

The impact of Covid means that this is the first time in three years we have followed this process. It has been extremely worthwhile to stand back and look at how we spend the money and review where our priorities need to be.

What is absolutely clear is that there is insufficient money to continue as we are. Substantial savings will have to be made. When we have completed the first round of the 'star chamber' process, we will then review the Medium-Term Financial Strategy to include the changes identified through the 'star chamber' process. At the moment it is unlikely that the savings identified to date will be sufficient, even if we make substantial use of reserves. Obviously, reserves can only be used once so their use does not resolve the underlying issues.

As I write we are awaiting the Autumn Statement on the 17^th of this month with some trepidation. We will not, however, receive details of the funding settlement from Central Government until mid-December at the earliest. Only then shall we have a clear sense of scale and direction. Frankly, we know the sense of direction; what we need is an indication of how bad it will be.

What this all demonstrates is how much time, effort and serious judgement has to be devoted to the Council's finances.

There has just been some latest data published on tourism which may provide a surprise to those people who believe 'people will always come to Stratford'.

In 2019 the value of tourism to Stratford-on-Avon District was £476 million; in 2021 this had dropped to £320 million. This is a decline of 32%. The volume of tourists declined from 6.5 million in 2019 to 5.2 million in 2021. This was decline of 20%. The difference between the decline in value and the decline in volume is largely explained by the drop in international tourists. International spend in 2019 was £61.8 million and this had declined to £9.9 million in 2021. This is a decline of 78%. In 2019 tourism supported 8,973 jobs across the District; by 2021 this had declined to 6,621.

I make no apologies for going into this level of detail because tourism is the second largest industry in the District. It is a Cinderella industry. Despite its size and positive impact on the UK and the local economy, far too few people treat it with the seriousness it deserves. This includes some of our residents. For some time, there has been a review in progress into the funding of destination management organisations, in our case Shakespeare's England. Conclusions and money are currently lacking which I think demonstrates one of the key failings of the UK. There is an unwillingness to invest in economic development and support organisations that can facilitate economic growth. We manage to miss so many opportunities to boost economic growth and then wonder why there is no money.

Together with Warwick District Council, the Council continues to fund Shakespeare's England because we understand how significant the tourist industry is to the area.

There has been one very bright spot during the past month. I attended the Stratford Herald Business and Tourism Awards dinner. I even had to give a speech. What the dinner showcased was that many local businesses and people are doing a superb job of adapting, thriving and growing. We need that from the private sector or, unfortunately, we will all end up poorer. There are times when I think some people do not appreciate this. They seem assume that the State will always bail everyone out. This for the birds. We can't afford to do that.