MAYOR Stuart Drummond admits the financial picture facing Hartlepool Borough Council is “pretty grim” after it was revealed the authority is to be hit with a further £766,000 worth of cuts next year.
The council is facing £8m cuts over the next two years after the local government finance settlement was announced ahead of a consultation period.
Hartlepool’s 6.5 per cent grant cut next year, a reduction of £2.9m, is £766,000 more than was originally anticipated.
Finance chiefs plan to use a £737,000 surplus from the council’s share of the collection fund in order to bridge the budget gap, along with £29,000 from this year’s underspend.
The council collects £40m of council tax and the collection fund surplus has arisen because of an increase in the numbers of houses, a reduction in the number of single person discounts and a change in council tax exemptions.
That has led to the one-off benefit, which was due to be used to support the 2014-15 budget.
Finance chiefs say the grant in 2013-14 will be £16m lower than it was in 2010-11, a reduction of 27 per cent.
The grant cut for 2014-15 is expected to be around 12 per cent, a further reduction of £5.3m, meaning a total of £8.2m grant cut over the next two years.
Speaking at a cabinet meeting on Friday afternoon, the day the Mayan community predicted the world would end, Mayor Drummond said: “It is quite ironic that the world was supposed to end today.
“The situation is pretty grim.”
Mayor Drummond said it appeared the only way to protect services was to build houses in order to access funding from the Government’s new homes bonus.
Chief finance officer Chris Little said: “The actual grant cut is £766,000 more than forecast in the medium term financial strategy, which equates to a grant cut of 6.5 per cent.
“The higher cut reflects additional national changes in the overall funding allocation and the impact of data changes.”
It was also announced the provisional settlement for the Early Intervention Grant (EIG), which funds services to give youngsters the best start in life, shows that by 2014-15 it will reduce to £4.789m, a £1.6m cut on the current year.
The 25 per cent reduction was described by senior officers as “soul destroying”.
The settlement figures are again based on “spending power” reductions.
Spending power is defined as total grants (including the main formula grant, new homes bonus, council tax freeze grant and NHS funding to support social care) plus council tax income.
Figures show Hartlepool’s spending power for 2013-14 is reduced by 2.2 per cent – higher than the national average of 1.7 per cent.
It was also agreed that the cabinet committee would write to the Government rather than send a delegation to meet ministers after being assured written representations would be given just as much weighting as a face to face meeting.