Council bosses in Hartlepool are facing a surprise £6m budget shortfall
Finance chiefs say the issue is ‘the most challenging budget it has ever faced’ after a Hartlepool Council finance and policy committee report revealed the council’s projected deficit for 2019/20 of £5.987million - quadruple the previously predicted £1.4m.
The deficit is being blamed on the impact of national pay rises and children’s services pressures.
The report from council director of finance and policy Chris Little, states the increase ‘is the direct result of factors outside the council’s control’.
It also says financial difficulties are expected to continue for the council, but the first step is to tackle the projected deficit - which equates to approximately 7% of the council’s general net fund.
The report said: “This increase is the direct result of factors outside the council’s control, namely the sustained increase in looked after children and the recurring impact of 2018 and 2019 national pay awards.
“The immediate challenge facing the council is the development of a strategy for 2019/20 to address the deficit.
“Given the scale of the cuts and efficiencies implemented over the last eight years the 2019/20 budget is undoubtedly the most challenging the council has ever faced.”
The council said it aims to approve savings proposals by the end of the year.
The report states the council may consider using reserves to address part of the deficit and defer it until the following year, but there would be ‘risks’ to the strategy.
In 2019/2020 Hartlepool will receive core government funding of approximately £25.5million which is a reduction of 45% on the £46.4million it received in 2013/14.
However council bosses warned the deficit for 2019/20 will not be the end of austerity and the they will ‘almost certainly’ face further shortfalls in 2020/21 and 2021/22.
Council bosses said addressing the deficit and future deficits will require a ‘robust and deliverable strategy’ as it assesses the services it provides.
The report said: “To address the known 2019/20 deficit and future deficits significantly more difficult decisions will need to be made in relation to prioritising what services the council will provide and which it will not.
“The current level and range of service is not affordable, or sustainable.”
Over the past eight years the council has achieved savings from reducing staffing numbers, with approximately 500 posts deleted to save £12.4million.
However bosses warned this cannot be repeated, and neither can efficiency savings as measures have ‘already reduced service capacity to a minimum level’.
Council bosses said they have not been able to offset funding cuts by increasing council tax due to the low council tax base in the area.
The deficit and future finance plans will be discussed at the finance and policy committee meeting at the Civic Centre on Monday at 10am.
Nic Marko , Local Democracy Reporting Service