HBC draws on £1.8m reserves to achieve balanced budget

It’s a tough task again at budget time for Hastings Borough Council to balance the books as government policy increasingly forces it to find its own income. For the second year running there will be a deficit of income against expenditure which will have to be covered from the reserves. Both the budget and the corporate plan for 2019/20 are available on the council’s website and residents are invited to comment on both. Nick Terdre reports.

Facing an expected shortfall of £1.8 million in its accounts during the financial year 2019/20, which begins in April, Hastings Borough Council plans to draw on reserves to cover the shortfall. “So over the coming year, we’ll have to find further savings, or generate additional income, to cover that gap next year,” says council leader Peter Chowney in a budget statement.

In following years the situation continues to look grim, with a a deficit of £2.5m forecast for 2020/21 and £1.9m in 2021/22.

Overall expenditure in the coming financial year is estimated at £13.5m, just less than the year now ending. However, when increased borrowing costs are taken into account, the figure rises to £16m.

Income generation has become a priority for the council as central government funding continues to be withdrawn. Since 2010, when the Tory/Lib Dem coalition government came to power, revenue support grant (RSG), the main form of central government finance for local authorities, has been cut every year, in HBC’s case from just over £10 million to £1.5m in 2018/19.

Retaining business rates

In 2019/20 HBC, along with all other councils in East Sussex, will participate in a pilot scheme whereby in exchange for losing the RSG, it will retain 75% of the business rates raised locally. In fact the 75% figure is misleading, Cllr Chowney says. “Hastings Council will retain 44% of the business rates, with 27% going to the county council and 4% to the East Sussex Fire and Rescue Service.

“That means Hastings Council gets to keep £9.5m in business rates – except that it doesn’t, because we’re subject to a business rate ‘tariff’ which means we have to give £5.5m of this to the government so they can redistribute it to other councils.”

The overall result, he says, is that Hastings gains just £50,000 more than it would under the existing rates retention scheme.

Meanwhile there are “massive additional pressures” on the budget: the new refuse collection contract and street cleaning services will cost £1.5m more than the old contract, while “rocketing homelessness” demands an ever greater share of resources – the council expects to spend nearly £1.9m on providing temporary accommodation for homeless people in the coming year, an increase of nearly three times over 2018/19.

Council tax

Council tax will be raised by the maximum permissible rate of 2.99%, equivalent to £7.69 a year for a band D property, while council tax charges for empty properties will also be increased.

“We are however very proud that we’ve been able to keep a generous Council Tax reduction scheme,” Cllr Chowney says, “which means that most people on out-of-work benefits (75% of claimants) will still pay no Council Tax. We believe we will be the only council left in the country who does this, for the coming financial year.

“Because of the extreme financial hardship that’s been caused by the early roll-out of Universal Credit in Hastings, we believe we need to do this to protect those who are least able to pay.”

Various fees and charges will also be raised, car parking among them. Different high season and low season parking rates will be abolished, with new rates set slightly above the old high season rate. Funding for the Stade Saturday and Herring Fair events will be ended.

Income generation

Meanwhile the council’s own income generation programme, which now has a dedicated manager, will be expanded with the project to build a supermarket for Aldi on the Bexhill Road. The next stage of preparation for the installation of solar farms in Hastings Country Park and Crowhurst is catered for with an allocation of £84,000 of capital expenditure, though following the recent Cabinet meeting the future of this project looks uncertain.

In 2018/19, gross income from commercial properties was around £1.7m, with just one asset, BD Foods, making a loss, but after deducting capital and interest payments of £1m, net income was reduced to £700,000.

“We will continue to generate new income where possible, for example through our own housing company that will both buy existing housing and start developing council-owned sites, energy generation, and other projects,” Cllr Chowney says. The housing company has a capital allocation of £5m in 2019/20.

Payments under the government’s New Homes Bonus scheme, which is based on the council’s house-building record, amounted to £1m in 2017/18, but fell to £650,000 last year. In the coming year they are expected to slip further to £560,000 before halving to £275,000 in 2020/21.

“This year will be our toughest budget ever,” Cllr Chowney concludes. “But we will do all we can to be more efficient, improve our performance and customer care, and get the very best for local people.”

The draft budget and corporate plan will come before the Cabinet on 11 February and the full council on 27 February.

 

The draft budget and corporate plan for 2019/20 can be seen here, where comments can also be made. The deadline for comments is 5pm on Friday 8 February.

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