Groups could use some of their reserves to avoid pain of cuts
Last week’s Reformer carried two articles on Voluntary Action South Lanarkshire (VASLan) and Healthy n Happy, expressing their opposition to budget savings proposals being considered by South Lanarkshire Council.
The paper also ran a letter from the latter group’s board of directors.
I am responding to these articles to make sure your readers have the full story behind the proposals and what their impact would be
First, I’d like to acknowledge that both of these organisations, like many other third sector groups, do some good work. Also, I understand their automatic concern at any suggestion that their income might be affected next year.
I know how they feel. The council has been forced to take £150million out of its budget in recent years. Our services are already being delivered efficiently, so every additional cut to our government grant means we have to make some very tough choices to find more savings.
Readers will understand that this inevitably has a knock-on effect on our ability to fund services, including those supplied by third parties. Unfortunately, organisations like VASLan and Healthy n Happy simply cannot expect to be exempt from austerity when it continues to hit the entire public sector as well as household budgets.
However, it is clear that the proposals which are being considered could be put into action with no impact whatsoever on the services provided by either organisation.
What has been suggested is that both use their very substantial reserves to cover the loss of council funding next year. This would be a one-off use of a proportion of those reserves as part of the council’s strategy to deal with the continuing cuts to public sector budgets.
The last available accounts for VASLan, 2014/15, showed they had £902,000 in reserves - enough to cover a whole year’s income from all sources, not just the council. More than half that sum is unrestricted. In fact, their reserves went up in that year by £143,000. The proposal is that they use £166,000 to replace council funding next year.
To be clear, if they do that they will be able to keep all their services going and there will be no need to reduce staff or make any other cuts.
It is a similar story at Health n Happy, which has a total of £854,935 in reserve and, again, this money in the bank rose last year. More than £150,000 of this is unrestricted, which would more than cover the £96,000 contribution from the council without any reduction in services or staff.
Part of that £96,000 pays for a staff member whose job it is to try to bring in further income, which is included in the potential £1.6m the letter from the chief executive claimed was at risk. But if Healthy n Happy use their reserves to fund this post next year that person’s work would continue unaffected, as will the ability to continue to attract other funding
The letter contained other inaccuracies. First, it referred to the £96,000 as Scottish Government funding. That is wrong. It is council money and therefore subject to the same pressures as the rest of our budget.
They also claim it amounts to 100 per cent of their Tackling Poverty funds but it is, in fact, 12.1 per cent of their total budget. If they continue to use reserves to cover their income, they can direct that budget how they like, whether to tackle poverty or keep paying for other services they provide, such as funding a radio station.
Again, Healthy n Happy don’t have to stop funding any of these things if, for one year, they use their reserves to cover the amount they hoped to get from the council.
There is nothing in the guidelines from the charity regulator OSCR that would stop them doing this.
I hope this makes clear the position .regarding these proposals and their potential impact. I stress that they are just proposals, though our budget has to be balanced so if any proposals are removed they will have to be replaced with other savings.
I think it is worth emphasising that we originally faced a £35m cut for next year but we have been able to reduce that to £22.461m. That reduction has been possible in large part because we have agreed to use a substantial sum from the council’s reserves.
In other words, we have decided to protect the services we provide by using some of the money we hold for contingencies. All we are asking is that others do the same.
I’m afraid that in the current climate no publicly-funded organisation has an automatic entitlement to funding, but my priority has always been the key frontline services local people rely on.
Council officers have taken this into account in presenting a package of proposals that protect the work of our teachers, our social workers and other key areas. After 20 years representing our local communities, I believe those are also the priorities of Reformer readers.