Council welcomes the pledge to ‘end of austerity’ and awaits detail of funding announcement

Hastings Borough Council welcomes the prime minister's pledge last weekend that there will not be a return to its policy of austerity and awaits further details of additional local government funding, as its own financial position remains uncertain due to increased financial pressure as a result of the coronavirus pandemic.

Over the past ten years, as part of the government's policy of austerity, the council has lost over £60m in government grant funding. Changes to local government funding has also put greater emphasis on councils to act more like businesses to develop their own income streams. This has meant that a larger part of council budgets are supported by income from property rentals, sales, fees, and charges for services, of which Hastings Borough Council is no exception. Unlike the grants this funding has replaced, these streams of income are more susceptible to wider economic conditions, upon which COVID-19 has had a significant impact.

Prior to the COVID-19, the council's financial position after years of budget reductions, was already challenging with £1.182m needing to be used from reserves to balance the budget in 2020/2021. This financial position has been made considerably worse by the impact of COVID-19. The council's efforts to support the town through this crisis comes at a projected cost of £1.52m in additional expenditure for the year. The monthly return to government in May on the impact identifies additional costs/ loss of income for the year amounting to £4.9m. So far the government has provided the council with £985,000.

Robert Jenrick, MP, and Minister of Housing, Communities & Local Government, is set to announce later today a further package of financial support to councils.
 
Cllr Kim Forward, leader of the council, said,

"Years of austerity have weakened the council's financial position. The council had already made significant budget cuts earlier in the year, so the loss of income and increased expenditure, currently £4.9m, as a result of COVID-19, has put significant pressure on the council's finances. The full detail of this financial impact can be found in the report to cabinet on Monday.

"We welcome the prime minister's declaration that there will not be a return to a policy of austerity. We also eagerly await the details of the government's new allocation of funding for local government to help us meet the additional costs and the loss of income that we have experienced as a result of COVID-19.
 
Cllr Peter Chowney, lead councillor for finance and property, added,

"An end to austerity would be welcome, as austerity cuts over the last ten years were still continuing, with Hastings Council receiving less government funding every year since 2010, including for the current year's budget. As Hastings Council has suffered relatively large cuts in government grants over the years, it's had to replace this with income from fees, charges and property rental income, amounting to around £14m a year. Like other councils, we have few opportunities to reduce staffing costs during the current crisis. Council income from car parking, weekly beach chalet lets, and the cliff railways has been hit especially hard.
 
"The latest estimates for additional costs, resulting from extra spending and loss of income, range from £3.65m to £10.1m by the year. This is in addition to the £1.2m deficit already forecast for the year. Deficits of this size are not sustainable. So unless this new money from the government is enough to cover the shortfall the council has suffered because of the current crisis, there further cuts to services and job losses will be necessary. We will need to look carefully at the detail of the announcement due to be made today and the details which will follow before understanding what impact it will have and how it affects our short and long term finances."