Hastings Borough Council facing significant financial uncertainty

The warning came at a meeting of the council’s cabinet on Monday (February 8), where senior councillors met to consider proposals for the authority’s 2021/22 annual budget. 

The budget proposals, which set are to be debated in more detail next Wednesday (February 17), include a 1.99 per cent council tax increase, savings of around £484,000 and a significant use of reserves to support services. 

It was during discussion of these proposals, that chief finance officer Peter Grace warned of the uncertain future the council faces as a result of the coronavirus pandemic.

He said: “As you are all aware it has been an exceptional year and we are going to have exceptional times going forward into the next financial year. 

“I think it is fair to say it is the most uncertain year – this year and next – given all the issues that have arisen.

“The income streams we have had in the past have all been affected significantly as a result of Covid-19.

“Our expenditure in terms of homelessness has increased tremendously. Over a million pounds of additional cost, we can expect this year and next. Capital expenditure is seriously implicated in terms of delays and additional costs as a result of Covid-19. 

“The major areas of income – council tax income, business rate income – they have all been impacted and are likely to be impacted next year as well.”

Mr Grace went on to say the council could face further financial pressure should the furlough scheme not be extended again at the end of April. 

This is because more people may need to begin claiming through the council tax reduction scheme and council tax hardship fund should unemployment rise.

According to meeting papers, the council spent around £1.5m more in 2020/21 than it had originally budgeted for.

The council had initially been expecting to face a year-end funding shortfall of around £1.182m, which it would have needed to cover from reserves. This shortfall now stands at around £500,000, however, largely due to additional funding from the government. 

But more money is likely to be drawn from reserves next year too, as current budget proposals – set for debate next week – predict a shortfall for 2021/22 of around £1.4m.

Mr Grace said: “We’ve had a one-year settlement from the government, so certainty is not there for the next few years and likewise we have no certainty in terms of our income or additional expenditure going forward. 

“What is helpful is the level of reserves you have set aside. You are in a good financial position, compared to many authorities, as a result of decisions you have made in the past. 

“Whilst we are still likely to have a significant deficit for this financial year  the fact that the government have funded us very well in 2020/21 leaves us in a position for next year where we can expect, hopefully and it is [with] fingers crossed, that our reserves will be sufficient to cover us and still be achieving the minimum recommended level of reserves.

“Thereafter we are in a deficit position somewhere in the region of £2.2m to £2.5m. That means, unless there is more money forthcoming from government, we will need to make substantial savings throughout next year, or at least identify them.”

Following a short discussion cabinet gave its backing to the budget proposals.

A fuller debate on the proposals is set to take place at a dedicated budget-setting meeting on February 17.