Hastings council sets new budget as it faces ‘biggest’ funding crisis

This week, Hastings Council agreed its budget for 2018/19 writes council leader Peter Chowney.

The scale of cuts in government funding have made setting a budget increasingly difficult. Since 2010, the council has lost a cumulative total of £45m in grant funding, even after local retention of business rates is taken into account.

We’re promised a ‘fair funding review’ by the government, to try to sort out local government finance and stop councils running out of money – as some will, and one (Northamptonshire) already has. But we’re assuming it won’t be remotely fair for us, and are expecting any additional funding to go to Conserbative run county councils and Conservative run rural councils. Who knows, we might be pleasantly surprised, or we might get a change of government, but for the purposes of planning our budget for future years, we’re assuming we’ll get nothing and all our government funding will run out in 2022.

But thanks to good management and income generation, we are around £1m better off than we’d predicted in last year’s budget. We’ve achieved this through more efficient working – for example, through buying new IT systems such as the Enterprise Resource Package, which integrates payments, HR, and finance. Also, by making more services available online through ‘My Hastings’, a system we’ve developed ourselves and are hoping to market to other councils.

42802389-46d2-497b-8887-25d891f8b103Commercial property purchase – like that in Sedlescombe Road North – means Hastings Borough Council has done better than expected on income generation.

But the main reason we’ve done better than expected is income generation, primarily through property purchases. By the end of 2018/19, we’ll have generated an additional £2.2m pa net income since 2016/17. Over £1.5m of that comes from commercial property purchases. Without that, we’d be looking at a far bigger gap in our budget than the £2.4m by 2021/22 we’re currently predicting.

So far, we’ve not had to use our ‘transition reserves’ – money given to us by the government a few years ago to partially compensate for lost grant and because of our better than expected position, we’ve had a year off from cuts – staff and service users need a period of stability.

So this year, there will be no cuts in frontline services, no redundancies, and no increase in parking charges. There will be a 2.99 per cent increase in Council Tax (the maximum allowed without a referendum), but as we’re one of the few councils to retain a 100 per cent Council Tax reduction scheme, the poorest people still pay nothing. The annual rise in the Council Tax bill for a Band D property (for the Hastings Council part) will be £7.48p a year.

Peter leafelt pictureHastings Borough Council leader Peter Chowney is blunt about the situation the council finds itself in: “We face the biggest crisis in local government finance ever seen,” he says.

But there are big pressures on our funding. The national homelessness crisis is hitting councils hard, and we’re expecting that to cost us getting on for a million pounds next year – four times what it did three years ago. But we’ve also allowed growth in our budget to take forward planning policy developments to help us redevelop White Rock and Bohemia quarter, and for energy generation.

And that’s the way of the future: income generation. We’ll continue to apply for external grants where those support our priorities – we’re already successful at that. But we’ll also be vigorously pursuing our three key income-generating activities: housing purchase and development, energy generation and commercial property investment. In time, these – especially energy generation – could well bring in enough income to make us completely self-sufficient.

But cuts in government funding are coming too deep and too fast to be sure we’ll raise enough income quickly enough. We’ll try, but further service cuts might be necessary, or we might have to ‘suspend’ some projects and services until we can generate enough income.

And yes, generating our own income does carry risks – I’d rather the government provided sustainable levels of funding to councils and we could focus entirely on our proper job of providing the best quality services. So the risk of every income-generating investment needs to be carefully assessed. But I’d much rather take the risks associated with income generation than the risks to our town’s prosperity and its residents by slashing services to the bone as the Tories want to do, proposing a budget amendment at the council meeting to slash £700,000 from our budget in largely unspecified service cuts, and abandon commercial property acquisitions. Needless to say, this amendment was defeated.

We face the biggest crisis in local government finance ever seen. So we’ll continue to find new ways to provide the services that local people need, we’ll continue to buy commercial property, we’ll continue to streamline our services to make them more efficient, and we’ll keep fighting on until we get a government that abandons austerity and funds public services properly.

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