Worthing Borough Council to seek exceptional financial support from government

Members of the council’s cabinet voted to send a letter from the CEO of the council to the Ministry of Housing, Communities and Local Government (MHCLG) to request help to balance the 2025/26 budget.

Currently, the council forecasts a budget shortfall that year of £2.53million and although a more ‘resilient and sustainable’ financial strategy is being implemented, it will need government support in the meantime, according to a report from the cabinet meeting.

For the current 2024/25 budget year, 19 councils were given exceptional financial support from the MHLCG in the form of capitalisation directions – meaning a council can use money otherwise ringfenced for capital resources to balance its day-to-day or revenue budget costs.

Although the council will likely be able to present a balanced budget for 2024/25, it will have to draw on roughly half a million of the £1.5million it has in reserves.

Annual budget shortfalls in Worthing are also forecast to reach £6.793million by 2029/30, and increase from next year to 2026/27 by nearly double, to £4.799million.

The council’s cabinet member for resources, John Turley (Lab, Gaisford), said at the cabinet meeting the council would be looking to use a mix of borrowing from the government, and capital receipts from developers of projects in the borough to fund the gap.

“We will be asking MHCLG to address our central funding gap associated with homelessness and the support accommodation subsidy”, he said.

“If we do, as we expect, receive a capitalisation direction from the government to address our funding gap then we will need to make sensible choices about where to apply our capital receipts versus when to borrow to support our revenue budget.

“This request is unlikely to have been reviewed before the 2025/26 budget is finalised and, therefore, funding support will be sought to bridge the budget gap, followed by a correction to reflect the actual need to borrow.

“At this stage we can’t say how much we’ll need to borrow… and for commercial reasons we can’t say at this stage which assets might be part of the disposal process.”

Mr Turley said the council’s new asset management strategy would look to improve the council’s ‘ageing’ asset portfolio, saying it was looking at maintaining the high-quality, low-risk and more-sustainable assets – like Worthing Pier and Lido.

Opposition leader Kevin Jenkins (Con, Goring) said in a statement: “We hold grave concerns that the magnitude of this decision is a strong indicator that the council is only a few steps away from not being able to publish a balanced budget for 2025/26 and having to declare effective bankruptcy if no government support of any kind is granted.

“In just over two years the Labour administration has more or less exhausted the council’s monetary reserves bringing them to unprecedented low levels that cannot support their continued spending.

“They have already indicated in the published financial reports that they propose increasing council tax by the maximum amount next year, placing greater financial burden on residents in Worthing.”

Carl Walker (Ind, Selden) asked the cabinet members if they ‘honestly believed’ they would be able to improve outcomes for residents, given the need for exceptional financial support and the ‘scale’ of the local government budget cuts over the years.

Leader of the Council Sophie Cox (Lab, Castle) said according to the Local Government Association one in four councils were expecting to have to ask the government for help in the next two years.

She said: “Despite the challenges that are ongoing I think we are improving outcomes by transforming the services and I think we need to see the innovation inside the services in order to improve them.

“These types of cuts [to local government] have been ongoing for over ten years now so councils have had to adapt to the way they approach funding.

“This ask to MHCLG, it is a big decision for us to make and I do think its the responsible one. We do know that we’re facing huge pressures, these demands particularly in housing aren’t going away.

“Yes we are in a challenging situation, we’re going to do all that we can to continue to provide for and to continue the services in Worthing and this feels like the right step to be able to do so.”

A report to the cabinet stated that in 2023/24, although Worthing had the second-highest number of households in temporary accommodation, it received less government support than other West Sussex councils per head.

It said the average funding received per household from the government’s Homelessness Prevention Grant in Worthing was £929 compared to the county average of £3,362.

This was likely due to ‘incorrect’ and ‘legacy’ data used to distribute the grant funds amongst the councils dating back over five years, the report said.

The council will have to present a balanced budget proposal to the government for 2025/26 by the deadline, around April next year, with officers saying they hope to have a better idea of government support by the announcement of the local government settlement in the near future.