Saving Hastings Borough Council's Finances: What Next?

Earlier this month, the Local Government Association published a long-awaited report on the financial stability of Hastings Borough Council.

The report paints a difficult picture of the council’s finances, warning that depleted reserves and spiralling homelessness costs could see the authority forced to issue a section 114 notice (a process often compared to bankruptcy) unless urgent action is taken.

To find out more about what comes next, the Local Democracy Reporting Service interviewed Labour council leader Paul Barnett, in a wide-ranging discussion covering housing, budget cuts and the future of a controversial hotel-building project.

Cllr Barnett said:

"The housing market exists outside of the council’s control.

"So, we can try every single aspect of intervention—which we are doing and we’ve more ideas to come—but we will have to see what impact they have and whether we are able to move fast enough. 

"A wave of housing crisis has come our way.

"If that wave increases because of what is happening nationally—interest rates, mortgage costs, employment issues—it will be really difficult for us to make our interventions fast enough to reduce the costs to the town.

"At the moment, we are confident that what we are doing is the right thing and will reduce our costs to a level where it is eventually falling."

These interventions, Cllr Barnett said, include the purchasing of properties to use as temporary accommodation and taking steps to support new affordable house building in the town.

The council has also hired new housing officers, who Cllr Barnett said will be taking the steps needed both to help those in temporary accommodation move on and to prevent more people falling into homelessness in the first place.

Through these measures and others, the council hopes to reduce its homelessness spending by £1m per year over the next few years. 

On top of that, the council says it also plans to find £1m of other budget savings over the next three years.

The LDRS asked Cllr Barnett where the cuts are likely to fall. 

"Every area is being looked at, it always is," 

"Last year was the first year I led the budget process.

"We went through every single area of council operations line-by-line and we made a whole range of reductions, some controversial, some less controversial. We will be doing the same this year.

"The difference this year is we are starting earlier.

"We are starting the process now and I hope we’ll be in the position to come forward with consultation on the budget proposals before Christmas.

"It’s too early to say what is on the list, but there will be a list.

"There will be things on that list that I don’t want to cut, but we’ve got no choice if we are going to balance our budget."

Another way the council is trying to bring in money is through the sale of its assets. 

To this end, the council has brought in the Chartered Institute of Public Finance and Accountancy (CIPFA) to carry out a review of its property portfolio.

While this review is still ongoing, the council has already agreed to sell four of its properties in hopes of an early win. 

"They are first of many.

"I can’t really understand, with the current climate, why any local authority would want to hang on to a vast estate. 

"Obviously some of the property makes us money, which is useful in terms of the revenue budget.

"But even there you’ve got to ask the question, ‘is it making enough money compared to what it would make if you got a capital receipt for it?’

"We are looking at that in detail on all of our properties."

Two of the properties set to be sold—land at Bexhill Road and Mayfield E—have outline planning permission for housing, as they were sites the council had initially intended to develop itself.

The council says it hopes to—but can’t guarantee it will—sell these sites to social housing developers, meaning the final schemes will be made up of affordable housing.

But when push comes to shove, which is the higher priority for the council: getting a good price for the land or building the social housing?

Cllr Barnett said:

"I think we can get both. We did it on other sites.

"Three or four years ago there was no interest from the private housing development market for building affordable or sustainable homes in Hastings; now they are queuing up to do it."

One area of special focus in the LGA report was the council’s arrangement to build and then lease a new hotel.

While not specifically named in the report, it is understood this refers to the Premier Inn set to be built at the former Cornwallis Street car park site.

The LGA report raised several concerns about this arrangement, including the the level of scrutiny the project received before moving ahead.

The LGA ultimately advised the council to “continue to explore the available options in relation to this contract, to minimise costs and maximise benefits in so far as is possible”. 

Cllr Barnett said:

"We have agreed to build a hotel, but obviously it has got to be affordable.

"We are doing a detailed tender exercise at the moment.

"It is a complex, big operation and as soon as we’ve got the results of that we will publish them.

"The town desperately needs more hotels and better hotels.

"I struggle to find anywhere suitable for my disabled parents when they want to come here and come see me.

"We have a lot of traditional seaside hotels that are not accessible to all the public for those reasons and the good hotels we’ve got are full. 

"The future, we know, is looking good for Hastings in terms of tourism.

"Why wouldn’t you want to come to the coolest town on the south coast and we are cool now not only in a trendy way, but we’re cool compared to Athens. 

"It’s a serious point isn’t it. This isn’t going to go away.

"The weather is going to get hotter and hotter [and flights] more and more expensive, people will want to holiday here."

Over the past few years, the council has been lobbying for government support to tackle its rising housing pressures.

A focus for its lobbying has been a review of the Local Housing Allowance (LHA) rates—the mechanism the government uses to decide how much money housing benefit claimants receive to help pay rent.

Cllr Barnett said:

"We’ve been lobbying this government for years to make changes.

"They haven’t listened. We just get a blunt refusal, even when our MP asks she gets a blunt refusal. It is really frustrating. 

"One of the things we’ve asked for is a review of LHA rates for Hastings, which are historically very low, set below other authorities in East Sussex for some bizarre reason.

"Probably because they were set in the days that rents in Hastings were relatively low, but they haven’t increased in years.

"If they were set at what the real rent is now in Hastings—the £1,000 level rather than the £700 level—that would immediately put us back in business in terms of the housing crisis.

"We are having to pay the difference at the moment, from money we just don’t have. 

"That is the single most effective thing the government can do today."

Cllr Barnett said the council also wanted to see government bring in rent controls, take steps to progress its promised ban on ‘no fault’ evictions and beef up the council’s compulsory purchase powers in a way that could force developers to build out housing sites more quickly. 

These changes, he said, would go some way to reduce pressure on the council’s housing budget. 

But can the council survive without those changes? 

"Time will tell", Cllr Barnett said.

"I think if we all pull together—private landlords, the voluntary sector, our housing associations—we can solve this. 

"Hastings is a real can-do town; it is proud of the fact it finds a way out of the biggest challenges it has.

"So of course, I am confident that we will do that. 

"I’m confident there will be a change of government as well.

"The real trick is to work with enough pace now to make sure that the changes we are making are made quickly so we actually keep ourselves on the right side of the budget line up until the time when we can see society changing for the better, which may be years away."