Preston set for £100m boost that will mean ‘less retail, more entertainment and creativity’ - but council budget remains on a knife-edge

That was the pledge from the politician who controls the purse strings at Preston City Council, as the authority set its budget for the year ahead.

Martyn Rawlinson, the cabinet member for finance at the town hall, was speaking during a meeting at which he told fellow councillors that against the backdrop of the biggest capital spending programme in the city’s history - which is largely focussed on the cinema and leisure development on the former site of the indoor market - funding for day-to-day local authority services remained on the brink.

It was for that reason, he said, that the Labour-run council would be increasing council tax from April by 2.99 percent - the maximum amount permitted without having to stage a local referendum on the issue. Half a percent of council tax income will this year be earmarked for a fund to help finance the next Preston Guild in 2032 - with the share taken growing by the same amount each year, on a compound basis, until the event takes place.

The authority will also have to make more than half a million pounds of savings during 2023/24 - with more to come in the years ahead.

Opposition parties broadly agreed with the thrust of the ruling groups’s budget proposals - but did draw up dividing lines over policies and plans involving relatively small amounts of the overall £24m revenue pot that the council will have at its disposal this year.

Cllr Rawlinson said that the £45m cinema-led scheme, known as “Animate” - on which work began late last year - would regenerate a city that was “changing to meet changing lifestyles”.

“The next two to three years are going to be hugely significant for Preston’s future. Our capital expenditure could reach £100m. Over half of this money is Preston taxpayer’s money being spent to develop Preston taxpayer’s assets - the very definition of community wealth-building.

“[There will be] less generic retail, more city centre living, more entertainment and more independent businesses.

“I’m stood right in the middle of what will be…a new leisure complex, reimagined Harris Museum and library, a youth zone, small business hub, Preston Market [and], hopefully, a hotel…and the Guild Hall,” Cllr Rawlinson said.

He added that it had been “crucial” to the council's future to get the funding for the investments right - including the timing of the borrowing that would be needed.

Budget papers reveal that the amount of “prudential borrowing” required for Animate will total nearly £28m over the next four years. A share of the £19m that Preston received from the government’s Towns Fund will also be used, with the remainder of that grant contributing to projects including the youth zone and Harris revamp

The £104.8m estimated capital budget through to 2026/27 does not yet include the £20m received under the Levelling Up Fund last month, which will be spent on schemes including a replacement for the city’s Old Tram Bridge between Avenham Park and Preston.

Overall, Preston will borrow £50.1m in the next four years, which councillors were told had taken into account considerations about “affordability”.

However, Cllr Rawlinson said that the day-to-day budget was “on a precipice” and added that if the authority did not make the maximum allowed council tax rise - amounting, he said, to around 10p per week for most households - it would cost the authority £400,000 a year, which could force it to “stop several services completely”.

But opposition parties questioned some of the ruling group’s choices - including keeping the Pavillion Cafe in Avenham Park in public control.

Delivering the Tory group's alternative budget, Cllr Harry Landless, said that the facility was “a good asset…and if we found the right operator, [then] rather than spending money on [it]...we'd actually make some money back”.

The cafe’s running costs come to £90,000 a year - an expense that Liberal Democrat group leader John Potter decried as being a case of “ideology…stifling pragmatism and reasoned thought”.

He said that the facility had only come into the council's hands because one of the people previously running it had passed away, but claimed that the Labour group had presented the transfer as “some sort of failure of capitalism”.

“There are numerous other organisations - faith-based [or] charitable - that have economies of scale [and] better supply routes than we do.

“A charity could…run it better and that would save money for the taxpayer at the same time. We’re not experts in running a food and drink establishment, “Cllr Potter added.

Cabinet member for climate change Carol Henshaw said that she believed the cafe was making a loss under its previous operators, while Cllr Rawlinson said that the £90,000 cost did not equate to the facility losing money, but was simply the cash needed to provide the service - in the same way that the authority spent money on services like waste collection.

The Conservatives also opposed a planned £40,000 study into how the council might be able to influence improvements in the private rented sector in the city - saying that they agreed with the sentiment, but that the authority did not have the staff available to conduct such an investigation.

The Tories and the Lib Dems once again rejected the idea of the city council investing £1m in a community bank, with Cllr Potter branding it “a vanity project” from which the originally proposed local authority partners - Liverpool and Wirral councils - had now “run away”.

Both opposition parties accepted the financial constraints under which the council was working and Cllr Landless said that he hoped to see “things [start to] happen now in Preston” off the back of all the planned capital investments.

In addition to Animate, the capital slate includes £45m worth of projects that are listed in the budget documents as being “in progress”, including work on parks and the Harris Museum refurbishment, and almost £20m that are either awaiting approval or are yet-to-begin schemes, including the city centre youth zone and upgrades to assets in the Harris Quarter.

Meanwhile, city council leader Matthew Brown hailed what he called the “minor miracle” of being able to set a budget that did not involve service cuts or job losses.

He added that the new city centre economy “isn’t going to be about retail, it’s going to be about expression and creativity - making us a lot more like Bristol and York, where we have a different feel to the city centre”.

"We're very proud...that the majority of the developments in the city centre will be publicly owned, so we have say over tenants, supply chains, workers’ rights [and] environmental conditions,” he said.

As well as the housing feasibility study, the budget also included a £50,000 pot to fund work considering the potential of several climate change schemes.

More than £500,000 of savings were agreed for 2023/24 - including £200,000 from a drive to find ways of working more efficiently, £100,000 from vacancies and a further £100,000 from short-term reductions in non-staffing costs arising from changes to the scheduling of the capital programme as a result of the priority schemes that are now getting under way.

In each of the following three financial years, savings of £600,000 will be required. The authority still has £1.3m in “contingency” options which would see the budgets of non-statutory services cut - but the council says that other methods of reducing expenditure will be sought first.

The council has previously agreed to use its reserves to bridge budget gaps in future years, a policy that will see the general reserve decline from £8.6m in 2023/24 to £1.3m by 2026/27.

WHAT’S THE ALTERNATIVE?

The Conservatives put forward an amended budget that would have seen council tax increase by 2.5 percent, instead of the 2.99 proposed by the ruling Labour group.

The Tories also proposed giving each councillor a £500 discretionary fund that they could use to inspire volunteering projects in their area to mark the King’s coronation this year.

However, the party came under fire for proposing to take £50,000 out of a community grant scheme from 2025/26. Explaining the plan, Cllr Harry Landless said that there were sometimes other sources of money available to community groups.

But Labour’s former council leader Valerie Wise said that competition for such external funding pots was “huge” and noted that the voluntary, community and faith sector was making a vital contribution to life in the city during tough economic times.

However, Tory group leader Sue Whittam said that critics of the proposal were obviously unaware that the council’s community grant fund was being underspent.

“So we’re not taking away anything from anybody - we’re just taking away the surplus that has not been used. We all recognise there are lots of very good causes that benefit from this grant,” she explained.

Labour deputy council leader Martyn Rawlinson said that all of the grant funding allocation was spent "eventually" and added that the two pence per week that he claimed households would be better off under the Tory council tax plan was unlikely to improve anybody’s lives.

“I think times are a bit harder than that, I’m afraid,” he added.

Cllr Whittam also defended the proposed introduction of the one-off, coronation-inspired councillor grant fund, saying that it was not about “dancing around, having picnics”.

“Because [King Charles III] is promoting volunteering…we’re saying [Preston should do that] and actually do some good,” she explained.

In their alternative budget, the Liberal Democrats said that they wanted to see £60,000 a year invested in tree planting in all of the city’s wards.

Group leader John Potter said that planting in already green areas was easy and cheap, but stressed that the benefits of new trees had to be brought to every corner of Preston.

“Re-greening of this city cannot be just the preserve of leafy suburbs in rural areas,” he warned.

Cllr Potter welcomed what he said was a Labour “U-turn” on the creation of a council tax-backed fund to help pay for the next Preston Guild, after a Lib Dem motion last year requested that the authority consider such a plan - an assessment that Cllr Rawlinson described as “pure fantasy”, saying the wheels were already in motion at that point.

The Liberal Democrat leader also set repeated Labour attacks on his party’s period in coalition with the Tories nationally - from 2010 to 2015 - in the context of the fact that the outgoing Labour government of Gorrdon Brown had proposed greater austerity savings than the coalition ended up implementing in power.

Both of the opposition amendments were voted down, while the main budget proposal was carried with the support of the ruling Labour group.

WHERE’S THE MONEY COMING FROM?

Capital programme total (2022/23-2026/27): £104.8m

Borrowing: £50.1m

Towns Fund: £18.5m

External contributions: £15.2m

Community Infrastructure Levy (developer payments): £8m

Disabled facilities grant: £6.9m

Capital receipts (sale of assets): £5.1m

Revenue funding: £1m

Source: Achieving Preston’s Priorities 2023/24, Preston City Council