Despite government grants, HBC is still under the cosh

The government this week announced a second tranche of funding worth £1.6 billion to help councils cope with the extra costs caused by the coronavirus. Hastings Borough Council says the allocation is well below what it really needs. Nick Terdre reports.

Additional funding worth £1.6bn has been made available to local authorities by the government to enable them to cope with the extra costs incurred in tackling the coronavirus crisis. This follows a first tranche of £1.6bn dispensed in March.

Hastings Borough Council’s share of the new funding is £918,693, which, combined with the £67,268 it received in the first round, makes a total of £985,961.

On announcing the new tranche, Robert Jenrick, secretary of state for Communities, Housing and Local Government, said, “The funding will mean councils can continue to provide essential services and support to those who need it most.”

The take from the town hall is rather different. “Unfortunately, the new allocation from the government is still insufficient to meet the additional costs and the loss of income that the Council is experiencing as a result of Covid-19,” according to Cllr Kim Forward, council leader.

“We provide many key services such as waste collection, street cleaning, upkeep of parks, housing services and temporary accommodation, planning and environmental health, and there is increasing pressure in all areas,” she said. “We will continue to press the government for fair funding for our town.”

Economy takes a hit

“Along with many other coastal towns our economy depends on tourism and sadly we are seeing businesses struggling and much higher unemployment with many more people claiming benefits. We are proud that our council tax reduction scheme still includes a 100% discount for those in greatest need, but it means our income will be greatly reduced in this area.”

Jenrick called the total £3.2bn for councils “an unprecedented level of additional financial  support in recent times.” But it comes after what has probably been an unprecedented reduction in council funding over the last 10 years. Under the austerity policy implemented by successive Conservative governments, HBC’s revenue support grant has been cut by over 90% to £1 million in the current financial year.

Hastings’ allocation in the second tranche – £918,963 – was based on population, and since the town has the lowest population in East Sussex, it has got the lowest allocation, Cllr Peter Chowney, finance and property lead, told HOT.

“But the costs of dealing with CV19, and the income reductions, have little to do with how big your population is,” he said. “As a more deprived council area where the council has had much bigger cuts than elsewhere, we’ve become very dependent on money we raise locally, a lot of which has declined or disappeared.

“For coastal towns such as Hastings, this way of allocating the money is particularly bad (as usual). Employment here is very dependent on tourism, which has obviously suffered badly. That means more people losing their jobs, which means the council will have to pay much more than expected through the Council Tax Reduction Scheme (that’s entirely funded by the council, there are no government grants for that).”

Hastings was one of the few councils which still have 100% council tax reduction for those on out-of-work benefits, he said.

Unsustainable

The latest estimates for additional costs resulting from extra spending and loss of income range from £2.8m to £6.2m for this year, in addition to the £1.2m deficit already forecast for the year. “Deficits of this size are not sustainable,” Chowney said. “If we don’t get further substantial funding from the government there will be a massive impact on council services.

“We’ve also learned that that the planned review of the way councils are funded is being delayed by another two years, so councils in the most deprived areas, such as Hastings, will continue to be denied the funding they need to meet local needs.”

Chowney also sought to put into perspective the business rates retention scheme introduced by the government in mid April, under which councils will be able to defer £2.6 billion of payments they are due to make to central government over the next three months.

“Of the £10.5m or so we were due to pay to government over 2020/21 we will now pay zero per cent over the first three months, around 8.5% each month from July to September and around 12.5% monthly for the period October 20 to March 21,” he told HOT.

That comes to just over 100%, but a small adjustment will be made. “We will await the revised payment schedule from the Government for the exact percentages and amounts payable. This will save us paying out some £850,000 in each of the first three months – but we have to pay more in the last six months of the year.

“There is no overall saving to the Council – just a little bit of help to manage the cash flow.”

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