'Completely broken' financing system leads to maximum Hastings council tax rise

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Higher council tax bills, a £700,000 draw from reserves and a new premium payment for second homes are among budget proposals set to go in front of Hastings councillors next week.

On Monday (February 12), Hastings Borough Council’s cabinet agreed its draft budget proposals for 2024/25, endorsing a number of measures set to go to a full council vote next Wednesday (February 21).

As previously reported, the council has already agreed to substantial savings for 2024/25, which a report to cabinet puts at £3.8m following some amendments since the proposals were first agreed in December.

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The proposals endorsed by cabinet cover the other elements of the authority’s budget, including a 2.99 per cent increase in its share of council tax – the maximum amount available without holding a local referendum.

Muriel Matters House, Hastings Borough Council offices.Muriel Matters House, Hastings Borough Council offices.
Muriel Matters House, Hastings Borough Council offices.

Council leader Julia Hilton (Green) said: “I think it’s clear that the system for financing local government is completely broken.

“We are having to raise council tax for residents. We do have a 100 per cent rebate for those on low incomes, but it is a regressive tax; it is not fair to keep raising council tax.

“When you pay more council tax for a semi in Hartlepool – and actually in Hastings – than an £8m mansion in Westminster, you know something is fundamentally awry with the system for financing local government.

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“My plea … to the government [is] reform our local government finance system so we can actually deliver properly for our residents and not have to constantly find savings.”

The 2.99 per cent increase will see the average Band D household pay £298.76 to the borough council next year, £8.67 more than in the current financial year.

With other authorities also increasing their council tax demands, the full bill for a Band D household in Hastings is expected to reach £2,441.36 in 2024/25.

Some property owners could soon pay more, however, as the council intends to introduce a new premium payment for second homes following a change in national legislation. This premium could see the owners of second homes pay double their usual council tax bill from April 2025.

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More immediately, the council is also proposing to reduce the time period before an existing 100 per cent premium applies to empty homes. Currently, a property owner can leave a home unoccupied and unfurnished for up to two years before the premium bites; the council is looking at reducing this period to 12 months.

The premium payments were welcomed by Hastings Independent councillor Paul Barnett, the council’s former leader and current cabinet member for finance.

In a statement released after the meeting, Cllr Barnett said: “This year using the new legislation Hastings council is coming hard after those landlords who leave valuable homes empty in our town.

“We all know family members or friends struggling to find an affordable secure home to rent and hundreds of homes are being left empty on purpose and used as financial assets, not as home and this has to stop.

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“The doubling of the council tax should start to sharpen these landlords’ minds and bring these needed homes back on to the market.”

During the meeting, Cllr Barnett described the wider budget proposals as “good news” for Hastings, arguing it would provide reassurance to residents about the council’s financial stability.

He said: “There were three principles that we said loudly in December needed to sit under this budget.

“We needed to live within our means first of all and stop borrowing money we couldn’t afford to borrow, we needed to protect our reserves at or above the minimum level of reserves … and crucially we need to protect frontline services to the public.

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“The savings package that was agreed in December did all of those things.”

The savings approved in December are extensive. They include: staffing cuts and changes; a £15,000 cut to the council’s events budget; asset sales; the removal of Youth Council funding; a move to ‘cashless’ operations; and increases in fees and charges, among other cost-saving measures.

Councillors agreed to these savings before the authority knew the basic level of financial support it was set to receive from the government.

Since then, the council has received details of the Local Government Finance Settlement, which sets out details of its Revenue Support Grant (unallocated funding the council can spend in any way it likes) for 2024/25.

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This shows that the council is expected to receive a Revenue Support Grant of £1.395m in 2024/25, a figure which comes to £87,000 (or seven per cent) more than in the current financial year.

When other funding streams are taken into account, however, the council’s overall income for 2024/25 is currently projected to be £132,000 less than in the current financial year.

When this is combined with increased costs (including those from inflation), the council expects to face an overall budget shortfall of around £700,000 in 2024/25. This shortfall will have to be made up with money drawn from reserves, but this is not expected to bring the council’s reserves below the £4m minimum.

The £700,000 figure is based on the council achieving all of its savings proposals, a prospect officers acknowledge will not be easy. A report considered by cabinet notes how the council’s historic savings performance has been around 80 per cent. If this performance is replicated, officers say, then there would be an additional £775,000 worth of deficit to cover.

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The council also expects to generate capital receipts of £4.63m through the sale of several of its properties next year. These properties include land at Upper Wilting Farm, 12/13 York Buildings and the Bexhill Road Pony Field among others.

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