‘Bleak picture’ for Hastings council’s finances as it faces making cuts or dipping into reserves

The warning came during a meeting of the authority’s overview and scrutiny committee on Wednesday (January 26), which saw councillors consider budget proposals for the coming 2022/23 financial year. 

Those proposals, which are currently out for consultation, include plans to increase the borough’s share of council tax by 1.99 per per cent and to make savings of £1.356m. 

During discussion, the committee heard from Peter Grace, assistant director responsible for financial services and revenues, who warned that even with the cuts and increase in council tax, the council would face significant pressures from inflation and rising demand.

Mr Grace said: “The end result of all of this is we are seeing — despite the £1.36m of savings you’ve identified so far — a deficit of £2.172m next year, increasing to around £2.6m in the years thereafter.

“You can balance the budget as a council next year by using the reserves again, but then those reserves will then fall below the minimum recommended level. 

“That minimum recommended level [is] £6m. We are forecasting reserves to go down to just below £5m as it stands.”

He added: “It is a bleak picture going forward in reserve terms. Once you’ve used those reserves you can’t use them again. They’re gone.

“So unless we make the cuts and undertake the reviews identified in this report at an early stage next year and actually make the savings, you are going to go below minimum recommended reserve levels and you will have to restore them.”

Going forward, Mr Grace said, the council would likely have to identify new savings and perhaps sell off assets when looking at future budgets.

Despite this, Mr Grace went on to say the council was not yet in section 141 notice territory (effectively the local government equivalent of bankruptcy), but further unforeseen expenditures could tip the balance. 

This, Mr Grace said, would be exacerbated by the uncertainty around what income the council would get from the government in future years and the fact that the 2022/23 amount would be less than was received in 2021/22 once inflation is taken into account.

One of the greatest pressures faced by the council, Mr Grace said, came from rising costs in homelessness, particularly as a result of the cost of using temporary accommodation. An urgent review of these costs is currently underway, he added.

According to budget papers, these rising homelessness costs saw the council spend an additional £336,000 above what was budgeted for this year, which would translate to an additional £783,000 over a full year.

Council leader Kim Forward said: “This is an absolutely urgent priority, not only because of the drain on the council’s finances but because these are people’s lives here. 

“I know we all agree; everybody deserves a decent, secure home. As Peter Grace says there is an urgent review being undertaken. 

“We’ve got to look at absolutely everything that we can, not just the way we are working at the moment and things we have thought of, but to really explore all avenues here.”

The 2022/23 budget proposals, which will go to cabinet and full council next month, include £521,000 of new savings, some of which will come from capital receipts. When put together with what has already been identified in previous years, the total savings to fall in 2022/23 would come to £1.356m. 

These new savings include a £10,000 saving on the annual hire of a mechanical street sweeping equipment and a £175,000 saving from a reorganisation of the council’s revenue and benefits team. 

The council would also look for more external funding for a number of its posts.

The budget papers also show plans for the street cleansing service to stop making ‘cleanliness performance checks’ from June next year, but this would not see a saving in 2022/23.