Hastings & St. Leonards on-line community newspaper

HBC headquarters at Muriel Matters House.

LGA review rings alarm bells for HBC finances

Hastings Borough Council is close to going bankrupt and urgently needs to take drastic action to avoid this fate, according to a draft review of its finances by the Local Government Association. Nick Terdre reports.

Invited by HBC in March to conduct a peer review of its finances, the Local Government Association has produced a draft report to which the council is now responding. Among excerpts which have been seen by HOT it states that, “Unless the revenue budget position is addressed as a matter of urgency, with savings promptly realised, then the CFO/S151 Officer will be left with little choice but to issue a s114 notice to the Council at some point during 2023/24 financial year.”

A Section 114 notice is issued when the CFO, (chief financial officer), who is also the Section 151 officer, considers the council may be unable to balance its budget, as required by law. It restricts all new spending with the exception of protecting vulnerable people, statutory services and pre-existing commitments.

Central government also has the power to send in external commissioners to take control of a council’s finances, as happened to Thurrock last September.

Hastings is not the only authority in financial trouble – all councils have been subject to the continuing squeeze on central government funding since 2010, recently exacerbated by the Covid pandemic.

The draft report warns that “the  auditors for Hastings have flagged substantial conerns about the financial sustainability of the organisation going forward,”

Council leader Paul Barnett, who last week took over the finance portfolio, addressing a Hastings Voluntary Action meeting on Friday.

A spokesperson for HBC, whose leader Cllr Paul Barnett was made the finance lead last week, told HOT the LGA review process was still under way. “The LGA Peer Finance Review has not yet been published. Currently our officers are discussing a draft  with the LGA and suggesting corrections to factual errors. As soon as this has been done, the report will be published alongside a response from HBC.”

Housing crisis

“These reviews are designed to challenge and support local authorities to improve their financial management. So we welcomed the LGA team here, and look forward to the final report. We know that this review needs to focus on our local housing crisis, as the financial impact of more than 1,000 residents needing temporary accommodation is the main risk to the council being able to balance its budget.”

According to the draft report, “In 2021/22 the Council incurred a significant overspend on homelessness services of £174k, which has grown to a forecast overspend of £2.029m in 2022/23…”

While savings have been identified through to 2025/26, the detail behind the headline figures is not clear, it says. Though the council has agreed to reduce the homelessness budget by £1m per annum from this year, “…the action plan does not exist for years 2 and 3, which coupled by [sic] the current rise in demand suggests these savings are unlikely to be achieved without swift and decisive action.”

The HBC spokesperson commented: “Tough messages on this are important, as the scale of the housing crisis means tough decisions for the whole council. And the need for tough decisions was clearly flagged up in the budget set by Full Council in February. The budget agreed cuts, and in addition, since then, a wide range of other changes have been implemented.

“So we will welcome the continued experience provided by the LGA in assessing the degree to which these changes are tough enough, and if we have the balance right in continuing to provide vital services for Hastings at the same time as further tightening our financial commitments.”

2022/23 better than expected

The report to the early July Cabinet meeting shows that the 2022/23 year turned out better than budgeted, the spokesperson said. This showed that interest payments were down and receipts up compared with the budget, resulting in costs £913,000 lower than expected. There was also no new borrowing during the year.

The Tory group leader Cllr Andy Patmore told HOT that, “Until we see the final report it is not possible to comment on its contents at this time.”

Green leader Cllr Julia Hilton lamented what she saw as Labour’s lack of urgency in tackling the situation and its refusal to involve other councillors in seeking solutions. “It’s no secret that things are looking pretty bleak because of the huge rise in homelessness and the resulting spend on temporary accommodation,” she told HOT.

“However this review emphasised the urgency of acting ‘at pace’ to have any chance of stopping the council going bankrupt. Here we are three months further on with no sign of the final report or any sort of action plan despite knowing the urgency for savings a year ago. When will the Labour group share their plans so all councillors can input into the urgent need to reform the council’s finances?”

Hotel plan

“Labour has been running this council for over 15 years and constantly seems to be unwilling to take the necessary steps to put our finances in order. In fact it has added to the financial pressure with its highly risky plan to build a hotel for Premier Inn on Cornwallis St car park. The car park  has now been closed for over a year with a loss of tens of thousands of pounds of parking income.”

On the plan for a new hotel, the LGA report says: “The return on investment is unclear and may actually constitute a cost/loss of income in the short to medium-term…”

Others have suggested that this issue is heading towards an unmitigated financial disaster.

There is little encouragement for HBC in the excerpts seen by HOT, though the review acknowledges that “The Council’s financial controls are showing signs of improvement under the new S151 officer but are not yet fully developed.”

Among other councils whose finances have come a cropper, Croydon declared itself effectively bankrupt last November, when Kent and Hampshire county councils warned they were heading the same way. Slough became effectively insolvent in 2021, when the National Audit Office warned that at least 25 local authorities were on the brink of bankruptcy.


If you’re enjoying HOT and would like us to continue providing fair and balanced reporting on local matters please consider making a donation. Click here to open our PayPal donation link. Thank you for your continued support!

Posted 10:51 Sunday, Jun 25, 2023 In: Local Economy


Please read our comment guidelines before posting on HOT

  1. DAR

    Well-spotted, Neville. And demand for housing is largely caused by cumulative net migration figures (annually a six-figure amount) going back at least 25 years. This has led central and local government to scramble to achieve unrealistic housing targets without enough “due diligence” (see Harrow Lane & other developments).

    Comment by DAR — Thursday, Jun 29, 2023 @ 12:12

  2. Christopher Hurrell

    The main risk is the cost of temporary accomodation.

    Yet developers in Hastings are still avoiding planning policies which stipulate affordable housing at 25% on brownfield and 40% on greenfield. Developers often produce viability reports that claim no affordable housing is possible – these claims often go unchallenged.

    Recent examples include the Ashdown House development of 171 homes which is contributing a mere 11.6% affordable social rented homes, the Park Lane development of 67 homes on Harrow Lane which is contributing zero homes – despite initially being presented as 26 units.

    HBC has a long history of losing out on affordable housing from Station Plaza, the Archery Ground, High Breezes, Fern Road ,Little Acres to name a few.

    HBC unlike other councils has failed in the last 20 years to produce a supplementary planning document on affordable housing – other councils recognise that this helps achieve quotas.

    HBC has also not implemented a post developement review of projects to check whether the developers claims that viability was not possible. This review mechanism is used by other councils and means that should a viability statement be proven to be untrue after developement then affordable housing contributions can be levied on the developer.

    These policy failures have contributed to the shortage of affordable housing in the town and to the increased requirement for temporary accomodation.

    I fear that viability is a game here in Hastings and that the developers play it better than our officers. It’s drinks all round for developer profits and another lost opportunity for much needed affordable homes. Nothing will change whilst our council is so unprepared to insist that affordable housing polices are respected and that all measures are taken to ensure affordable housing quota are met.

    Comment by Christopher Hurrell — Thursday, Jun 29, 2023 @ 11:18

  3. Neville Austin

    Whatever the adequacies or inadequacies of the current HBC it is worth noting a significant issue from Nick Terdres report above :
    ‘ “the financial impact of more than 1,000 residents needing temporary accommodation is the main risk to the council being able to balance its budget.” According to the draft report, “In 2021/22 the Council incurred a significant overspend on homelessness services of £174k, which has grown to a forecast overspend of £2.029m in 2022/23…” ‘

    Comment by Neville Austin — Wednesday, Jun 28, 2023 @ 22:16

  4. Anthony Hack

    Can anyone give me an idea what happens to these councils that go bankrupt? It’s happened to several and there will be many more by the looks of it, so what ends up being the most likely model afterwards, or is it completely unpredictable due to there being lots of options? I would especially like to know the view of an organisation like Hastings Voluntary Action, or from councillors themselves.

    Comment by Anthony Hack — Monday, Jun 26, 2023 @ 20:28

  5. Tim Barton

    There has long been a risk of a merger with Bexhill, forming a ‘unitary borough’. It is urgent we avert this, as that will undoubtedly be a change to the control to Tory dominance. Meanwhile, so-called (toxic) ‘entrepreneurial socialism’ has effectively been forced upon the town my massive funding cuts from both Westminster & Lewes (ie, a Tory assault on Labour-run municipal councils). It has been a catch-22, but also handled a bit shoddily. How much blame lies with the elected councillors, how much with unelected and apparently unaccountable career council officers is an open question – but, given a government failure to render long-term refusal to develop land by construction companies etc (‘land-banking’) illegal after a legislated term (say 5 years), and a Tory allowance to appeal against set social housing percentages in court, any council is hamstrung unless certain players ‘play ball’. These may well ease, a little, under Tory control, but, dear voters, that’s a form of blackmail.

    Comment by Tim Barton — Monday, Jun 26, 2023 @ 18:52

  6. Bea

    The councillors are certainly very passive when it comes to the finances and management of property assets. But I think the main problem is that they put their faith in “development” staff who are often new to the job, have little knowledge of the town and come up with ambitious plans that (spoiler alert!) don’t work. HBC does have some good staff, but they are not allowed to interfere with the rock stars of “development”.
    Councillors do need to take responsibility, and it would help if the Labour Group listened to points made by councillors of the other parties.

    Comment by Bea — Monday, Jun 26, 2023 @ 11:43

  7. Philip Oakley

    Cornwallis car park hotel development, Harold Place restaurant development, St Mary in the Castle, Azur, Millets project, Harrow Road Housing Development and of course the Pilot Field are some of the examples that show an inability to manage assets and development projects. It’s unclear whether it’s Councillors or Officers behind these failings. Certainly time to end property speculation and properly manage the Town’s assets.

    Comment by Philip Oakley — Sunday, Jun 25, 2023 @ 20:03

  8. Ken davis

    It is such a great shame for the town and its people that the Council continues not to use the great resources it has for the benefit of all.

    Comment by Ken davis — Sunday, Jun 25, 2023 @ 19:10

Leave a comment

(no more than 350 words)

Also in: Local Economy

More HOT Stuff

    HOT is run by volunteers but has overheads for hosting and web development. Support HOT!


    Advertise your business or your event on HOT for as little as £20 per month
    Find out more…


    If you like HOT and want to keep it sustainable, please Donate via PayPal, it’s easy!


    Do you want to write, proofread, edit listings or help sell advertising? then contact us


    Get our regular digest emails

  • Subscribe to HOT