Observer column: 10 January 2020
As we enter the New Year, the council has once again had to put together a budget for next financial year. That's a task that gets harder each year - and more uncertain. Over the last ten years, the money available to Hastings Council has reduced dramatically. We've lost over £55m in government grants cumulatively over that period, from a net budget of around £15m. We've been able to replace some of that by generating additional income, for example by purchasing commercial properties, which has raised over £1m to offset funding cuts. Nevertheless, many services we used to offer have gone completely.
This time last year, we were expecting a £1.75m deficit for the 2019/20 budget. Despite making over £300,000 in savings, the deficit has grown to over £2m, because of additional demands on the council, notably the increasing demand on our homelessness budget, with costs rising by £386,000 more than we'd expected. We'll have to cover that deficit by using reserves.
Over the last year, a lot of work has been done to identify savings to reduce spending. In the end, we were able to identify almost two million pounds in savings and service cuts. That means a cut of around 30 posts - nearly ten percent of the total workforce. Those job losses will affect the council's capacity to provide services, and some services will cease entirely. We had thought that we'd 'reached the bottom' and that with those savings we would then, finally, have a balanced budget.
Sadly, that proved not to be the case. We had further unexpected cuts in our grants from central government, as well as yet more additional spending demands, including the increases in temporary accommodation costs, works to the Buckshole Reservoir because of new safety regulations, and repairs needed to cliffs in the council's ownership that have become unstable. All of which means that we still have a deficit of around a million pounds, despite making £2m savings.
Next year's budget, and the full list of savings we're proposing to make, is now available for consultation on the council's website. At the moment, it's not clear how we'll cover that gap. We will of course be looking at new income generation initiatives, including sustainable energy generation, commercial property purchases, and 'commercialisation' of council services. And the council does remain ambitious, with a comprehensive programme of capital regeneration schemes - in other words, building projects that we can fund from borrowing, and repay the borrowing costs through income from the completed scheme, or from property sales, so they result in no spending in our day-to-day revenue budget. We can only borrow to fund such capital schemes - councils can't borrow to pay for day-to-day spending, and can't end the year with their revenue budget in deficit.
But the future is not looking good. The government is intending to carry out a 'fair funding review' of local government, but we anticipate that this will divert money to county councils to boost spending on adult social care, rather than provide any more money for district councils such as Hastings. We're not the only district council in this predicament - others have even bigger problems. Those in deprived areas such as Hastings, where demands on their services are greatest, have been particularly hard-hit. So for local government. austerity is far from over. If councils aren't properly funded in the future, they will simply no longer be able to function.
Council Leader's column