Observer column: 05 October 2018
Mind the gap
Council budgets have been in the news lately. After Northamptonshire ran out of money earlier this year, others have been named as not far behind, including Torbay, Rutland, Surrey, Somerset, and East Sussex. While Hastings Council is not there yet, we need to make major savings to avoid it. This year's budget-setting process is going to be difficult and painful.
The crisis in local government finance has been caused by year-on-year cuts to the money central government gives to councils since 2010. Over that period, the total grants that Hastings Council receives from central government have fallen from over £12m to less than £4m, funding a net budget of £15m a year. Since 2010, Hastings Council has lost a cumulative total of over £40m.
We have to some extent been able to offset this by increased income generation, through commercial property purchases in particular. But services have been cut too. Those that have disappeared completely include community development, as well as apprenticeship and training programmes. Others have been cut dramatically. For example, when our street warden team was created using special grants from the previous Labour government, there were 24 wardens plus a separate team of parking enforcement officers. Now, there are just nine wardens, who have to do off-street parking enforcement as well.
Over the next three years, as government grant funding is cut further, a £3m gap will emerge in our annual budget. While the council does have healthy reserves, which will help us balance the books, these would disappear in three years if we made no further savings. Some of our income-raising ideas, for example sustainable energy generation through a local supply network, could bring in more than enough money to cover that gap. But not yet, it will take several years to set that up, and amend our local plan to allow it. As councils can't borrow money to tide them across budget shortfalls, we have no option but to make further cuts, even if that might mean discontinuing services that we will be able to resume in the future.
So for a whole week at the end of October, I will be closeted away with senior council officers and the deputy leader, looking at every service the council provides, and seeing how it could be reduced or discontinued - which means looking at pretty much everything we do. Although some of our services have to be provided by law, few if any have a defined level of service. For example, councils have to collect domestic refuse, but the law doesn't say how often. One Welsh council has now reduced its bin collections to once a month - although that's not something I'll be suggesting for Hastings.
Most councils will be embarking on this process now. Some have left it too late and will run out of money anyway. The one thing pretty much every council leader is agreed on, whatever their political colour, is that local government finance is unsustainable. After the next three years of further planned cuts in government grants, there won't be enough money to run even the most basic council services. The government continues to ignore this, staring into an abyss that they're pretending isn't real. But it is. Councils need more money. If they don't get it, council services in some areas will collapse. And there's no plan to stop that happening.
Council Leader's column