Mayor - Explaining the budget

WORK has already started in earnest on next year’s budget and it is fair to say that the outlook, even at this early stage, is pretty grim.

The cuts in our core revenue budget being imposed on us by the Government are even deeper than they were last year.

We have to find £6.6m of savings again for next year on top of the cuts that we had to make for this year’s budget. It is not a position anyone at the Council wants to be in nor is it a situation of our own making.

Whether the cuts to public spending need to be as deep as is claimed or whether the Conservatives, with the Lib Dems going along with it, are making decisions based on political ideals without little worry about the impact in areas like Hartlepool, I’ll leave that up to others to decide.

Whatever the reason, it is highly unlikely that they are going to change their minds anytime soon so it is left to us at a local level to make the unpopular decisions and try and balance the books whilst maintaining as many services as possible.

It goes without saying that I will continue to make representations to the Government on the unfairness of these cuts to Hartlepool at every opportunity as well as offering alternative solutions and suggestions.

What I won’t do however is keep complaining about the situation.

Moaning won’t make any difference to the politicians at Whitehall and it certainly won’t gain any sympathy from everyone in the town who will be affected by the cuts.

That said, I do think it is vitally important to communicate the Council’s budget position as simply and as often as possible to help give people a clear understanding of a very complex issue. People will not like or necessarily agree with some of the decisions that are going to have to be made but if people at least understand the reasoning behind such decisions then there may be at least a reluctant acceptance.

The way local government is funded is extremely complicated.

The difference between revenue and capital funding is a prime example. A question I have heard a lot recently is about how the council can justify spending money on buying the likes of Jacksons Landing or improvements to Church Square when it can’t afford to fund bus services or some community centres.

The answer is simply that these two issues are funded from two very different types of funding streams and you are not allowed to use one to fund the other and vice versa.

A comparison can be made with a household budget. If a household had a monthly income of say £1,000 and every penny of that went on similar things each month, it could be compared to the council’s revenue budget.

For example; out of the £1,000 would come the rent or mortgage payment, utility bills, food and groceries and you might have things like gym membership, catalogue or credit card payments then maybe a bit left over to treat yourself to a night out each month or a new outfit.

If that monthly income was to reduce to £900, inevitably some sacrifices would have to be made. You might knock the gym on the head or stop your subscription to Sky.

You would look at ways of making your monthly bills cheaper and perhaps try to cut down on the amount of petrol you use each month.

Imagine then, the following year, your monthly income reduced to £800, you would have to seriously consider stopping things like a mobile phone or internet access. You may even have to sell your car because you can’t afford to run it anymore. This is exactly what has been happening with the cuts to our core budget at the council. We have to run services on considerably less money.

Going back to the household budget, you might have some savings, say £500, tucked away or perhaps just sold your car for £500. Now, your living room is in desperate need of redecoration or your cooker has recently broken and needs fixing.

This £500 is a one off and you would have to use it to fund the repairs or decoration. It would be pointless using it to replace the £200 a month that you have lost as it would only last for two and a half months and you would then have to make the savings anyway.

This is very similar to the Council’s capital budget situation apart from the fact that even if we wanted to use the money to supplement the loss of revenue funding, we would not be allowed to do so. Capital funding is to be used to one-off projects.

So, if the Council were not to buy Jacksons Landing or do any work on Church Square, the money could not be used to sustain the running of community centres or fund bus companies.

Not only would it be delaying the inevitable, but the Government’s auditors would be down on us like a ton of bricks.

Whilst I’m on the subject, decisions are due to be made shortly on both Jacksons Landing and Church Square.

The council will only enter into a deal with Jacksons Landing if the outcome is going to be a profitable one. The decision on Church Square is a full council one and I don’t know which way that will go. It appears from the public consultation that the vast majority support the proposals but if it isn’t funded, the money will have to be spent on another capital project.

I hope my analogy of the basic way the council budgets work hasn’t left you even more confused than before and I will continue to write about the budget position and the council’s finances in the coming weeks ahead of what will be the most difficult budget I have ever been involved in.