Setting a budget for a council caught in perfect storm

It’s budget time for local councils!

In the coming weeks Hastings Borough Council (HBC) and East Sussex County Council (ESCC) will be debating the finer points of how to spend their budget in the coming year and of more significance to local residents they will be taking decisions on how to raise that money. At the end of the day that’s going to hit us all through increased council tax and increases to the costs of other services our councils provide.

During January Hastings In Focus will be taking a look at what the two councils are proposing for the coming year and will listen to the debates and arguments in council chambers as budgets are battled over and set. It will be interesting to compare and contrast whether Conservative controlled ESCC and Labour controlled HBC take different approaches and whether the debates in each council’s chamber are approached in different ways because of the political make up of each authority.

In the first of our reports we take a look at Hastings and how the leader of the council Peter Chowney – who is also Labour’s prospective parliamentary candidate – sees what has been happening to the authority’s budget and how that is going to affect the coming year.

“Over the last eight years, we have been faced with continuing year-on-year cuts to our government grants. Revenue Support Grant, the main grant we received from central government, has been cut over that period from around £10m, to nothing at all,” says Mr Chowney.

“Since 2010, the council has lost well over £40m, cumulatively, from a net annual budget of just £15m. So we’ve had to replace that funding wherever we can by raising money locally. We’ve increased fees and charges, raised Council Tax and generated our own income, notably through commercial property purchases which have generated over £770,000 a year in additional net annual income for the council.”

The ‘net budget’ for Hastings Council is about £15m but he says that is not the whole story.

screen shot 2019-01-17 at 09.25.25
Where Hastings Borough Council’s money comes from.

“Each year, HBC has a turnover of hundreds of millions of pounds, through all the business rates it collects and the total council tax and precepts it collects. However, it doesn’t keep most of that. The total HBC budget is around £80m but deduct the money we pay out in Housing Benefits, which is entirely funded by the government, and that brings the council’s gross budget down to around £28m,” he says

The loss of the revenue support – a direct funding contribution to the council from central government – which has declined from £10m in 2010 to nothing in the coming financial year means that much more of HBC’s budget has to be covered by fees, other charges and commercial rents.

Mr Chowney says that this year HBC is caught in a ‘perfect storm’ of cuts to its grant funding coming at the same time as it is facing ‘massive additional pressures’ on its budget.

“The new refuse collection contract and street cleaning services will cost £1.5m more than the old contract, which collapsed.

“Added to that, rocketing homelessness has pushed the bill for rehousing homeless people to over £1m a year, all of which means that we were facing a gap in our budget for the coming year of over £3m equal to 20 per cent of the total net budget,” he told Hastings In Focus.

He says the council has had to cover that gap by cutting services, efficiency savings and income generation.

“There will be around 14 council staff redundancies. However, thanks to careful management and vacancy freezes, there will be only one compulsory redundancy – all other staff affected will take voluntary redundancy, will be redeployed into vacant posts, or the posts we’re cutting are already vacant,” he says.

The cuts that have been made to the budget are made up of many smaller items, but some of the most significant reductions include:

  • Savings to the grounds maintenance budget £117,000;
  • £100,000 in revenues and benefits staff (Universal Credit rollout means fewer people on Housing Benefit);
  • Reducing the park rangers from three staff to two £40,000;
  • Reducing CCTV monitoring hours £30,000;
  • Deleting the Cultural Development Manager post (this was a post set up to deliver the ROOT1066 festival I 2016, and was intended to be temporary), saving £64,000;
  • Ceasing funding the Herring Fair and Stade Saturdays;
  • Reduced contribution to White Rock Theatre, as agreed in the new contract with HQ Theatres last year.

We’re also considering making savings to the new refuse contract, by reducing the collection of recyclables in areas that currently get weekly collections to fortnightly, but install additional communal recycling facilities in those areas. Those savings haven’t yet been allowed for in the budget.

You can find the full list in the Budget Consultation Report at: https://www.hastings.gov.uk/my_council/consultations/corp-budget-19/

The proposal being considered by HBC would see its element of the Council Tax increase this year by 2.99 per cent, or £7.69 per year on a Band D property. It’s the maximum the government will allow a council to increase its council tax by.

screen shot 2019-01-08 at 12.44.00
New refuse collection contracts and new in-house street cleaning services will cost the council more money in the coming year.

But that, says Mr Chowney, that will only cover about half the gap, and the council will have to take around £1.8m from its reserves.

“Over the coming year, we’ll have to find further savings, or generate additional income, to cover that gap next year. There is some growth in the budget, too, although this is largely unavoidable spending, or spending that will help us save money in the longer term,” he points out.

Growth items include:

  • Completing the transition to online services, making all services and payments available online £60,000;
  • Windows 10 and Office 365 licence £87,000;
  • New staff to develop the Bohemia Quarter/White Rock Gardens project £66,000;
  • Additional legal staff for enhanced enforcement (eg over flytipping) and house purchase £79,000.

He says the council will continue to bid for external grants to fund projects that help it meet its priorities, “We’ve been very successful at this, raising several million pounds over the last couple of years for additional targeted support for rough sleepers, a series of employment and community development projects in the most deprived parts of town, improvements to the seafront, funding to help our local fishery, and more.”

And this year HBC will be bringing its street cleaning service back in-house, running it directly rather than through an external contractor. Mr Chowney says this will give the council more control over the service, making it more responsive and helping improve standards of cleanliness across the town.

“We’ll also continue to look at new ways to tackle the challenges we’re facing, including homelessness, deprivation, and climate change, as well as continuing existing initiatives such as our support for cultural regeneration, and physical regeneration through the Grotbusters scheme and private rented housing licensing, all of which have helped the regeneration of our borough and its local economy,” he says.

HBC will also continue to generate new income where possible, says its leader. It now has its own housing company that will start developing council-owned sites, energy generation, and other projects.

“We’ll also investigate marketing our award-winning My Hastings online reporting and payments framework to other councils and we’ll aim to cut the £1m plus we’re now spending on bed and breakfast accommodation for homeless households by buying homes to use as temporary accommodation. This year will be our toughest budget ever,” he says.

He promises that the council will do all it can to be more efficient, improve its performance and customer care, and get the very best for local people. He warns, however, that after this year HBC faces what he says is ‘an unknown future’.

“This is the last year of the four-year budget settlement we get from government. During the coming year, the government will review the way it funds local government and at the moment we have no idea how that will affect us,” Mr Chowney says.

“It could give us more money, or less. For the purposes of planning future years’ budgets, we’re assuming the amount of money we get from rates and Council Tax will stay the same – but it almost certainly won’t.

“Overall though, the government appears to be saying that it won’t change the total amount available for local government, it will only shift it from one council to another but this won’t work – there simply isn’t enough money in the system to run local government.

“Local government financing is unsustainable, too much money has been cut from the overall budget to keep providing essential services across the whole country and this has to change,” he concludes.

Advertisements

One thought on “Setting a budget for a council caught in perfect storm

Add yours

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Blog at WordPress.com.

Up ↑

%d bloggers like this: