Thursday, 27 June 2013

Facing up to the financial challenge

Naturally I am worried about the latest public spending cuts announced by Chancellor George Osborne in his comprehensive spending review.

Local government takes the largest reduction with a 10% cut in 2015/16 on top of the 33% cut it has already experienced. But things are worse for Hastings. The council has already had to cope with a 50% cut in the grants it receives from central government since 2010; 10% more will be very challenging.

This is because the extra grants the council has received due to the town’s extra needs have been cut still more extensively. Hastings is one of seven councils that have experienced the largest reduction in revenue spending power. And the remaining extra grant the council gets (for efficiency support) runs out in 2015 – so that could really be a very difficult budget year.

For the current financial year 2013/14 the council had to shed 40 posts (although we managed to limit the number of compulsory redundancies to less than a handful) and in fact employs about one third less staff than in 2010.

Hastings is more vulnerable to cuts in government grants than other south eastern councils as half its income comes from the government. Other areas with more properties in higher council tax bands raise more money from their local people. In Hastings most properties are in council tax bands A and B and the tax is based on the value of people’s homes.

Also we are quite a constrained local authority area – surrounded by the sea and areas of outstanding natural beauty. That means our capacity to allow for new housing is much less than some leafier areas. But the government incentives councils to allow for more housebuilding by paying a new homes bonus for each new home. So Hastings stands to make a lot less than others through this funding source.

Yet at the same time demand on council services is rising with homelessness figures rising for example, with residents facing more challenges retaining their homes with welfare and benefit changes.

But we haven’t just been sitting back and complaining. Our two major contracts – for waste collection and for parks and gardens – have been relet in partnership with other councils saving us £1m a year. We have re-organised the senior management in the council saving £350,000 a year and we have looked at every area of our activity to make it as efficient as possible.

But from 2015 I am still worried that whereas up to now we have asked local people which services they would least like to see reduced, with our income continuing to decline we may have to look at which services do we cease to deliver at all.