'Significant' Deficit For Hastings Borough Council In Coming Financial Year

Hastings Borough expects to face a significant deficit in the coming financial year, according to a report seen by councillors this week.

The matter was raised on Wednesday (January 20), where the council’s scrutiny committee discussed a draft version of the annual budget proposals.

While officers said the final figures are still expected to change once the final grant settlement figures are received from the government, the draft proposals show the council currently expects to face a deficit of £1.59m in its upcoming budget.

This is despite cuts and savings of around £484,000 and plans to raise council tax by 1.99 per cent for another year.

In the draft report, a council officer said:

“Despite identifying Priority Income and Expenditure Review (PIER) savings of £484,000 these are insufficient to balance the budget in 2021/22 without the use of reserves.

“Further significant savings need to be found during 2021/22 in order to reduce the call on the general reserves, achieve a balanced budget, and ensure that reserve levels can be maintained at above the minimum recommended level. 

“The council needs to be in a position to match its available resources to its priorities across the medium term and to maintain sufficient reserves and capacity to deal with potentially large and unexpected events in addition to fluctuations in income and expenditure levels – as highlighted by the Covid-19 crisis.”

The report goes on to warn that, within the year, the council could reach the point where its unallocated reserves fall below £6m, which is considered to the absolute minimum level.

Officers say the council also faces “a much greater degree of volatility” in terms of its income from council tax and business rates, as a result of both Covid-19 and the potential economic impacts of Brexit.

The council has already seen significant financial disruption from the pandemic, taking on a range of unexpected new costs within the year. The costs of temporary accommodation in particular had increased ‘dramatically’, officers said, coming in at almost £900,000 over budget.

However, cabinet member for finance Peter Chowney was firm that extra funding from government had been “adequate” to cover the immediate costs of the pandemic.

Speaking to the scrutiny committee, Cllr Chowney said:

“You might expect me to sit here, bang the table and say the government money we’ve been given was completely inadequate [and] it was nowhere near enough, but actually that is not true. The government money we were given was adequate. 

“I don’t know if that has been true for all councils, I think a lot of councils have said it wasn’t adequate but for us it was.

“However that does come on top of ten years of austerity cuts, where we have lost probably upwards of £50m now in cumulative grant funding cuts. It doesn’t do anything to compensate for that and we’ve got a deficit still left over because of those cuts, which we have still got to cover.

“The fact the government has seen sense during the course of this year and has adequately funded us for the additional costs and loss of income because of the covid crisis, hopefully that will make them see that local government does need to be funded properly.”

However, later in the meeting this point saw some pushback from Conservative group leader Rob Lee. 

Responding to a point by Cllr Warren Davies, Cllr Lee said: “He may talk about ten years of austerity, but I can talk about ten years of poor budgets from a Labour leadership of Hastings Borough Council and the financial problems have been caused by Labour leadership locally.”

Further discussion on the council’s budget proposals are expected to take place in the coming weeks, with a final decision due to be taken at a meeting on February 17.

By that meeting the council is expected to have the final grant figures from government.