Hartlepool Borough Council plan to use millions in reserves to help tackle Â£6milllion deficit
Council finance bosses have laid out plans to tackle a Â£6million budget deficit for next year, including using almost Â£4million of its reserves.
Hartlepool Borough Council’s finance and policy committee previously reported it must find funding to tackle a £5.987million deficit for 2019/20.
This reported £6million deficit is calculated after a 3.9% increase in council tax for 2019/2020, which includes the 1% social care precept, which was indicatively approved in February 2018 and is expected to be referred to full council to be rubber stamped next week.
Finance bosses are looking to gain approval to use £3.847million in reserves to tackle the majority of the £6million needed, which will defer the budget deficit until the following year.
Council bosses have said budget savings in recent months made by individual committees will achieve a further £1.040million savings, including £510,000 from children’s services and £237,500 from adult services.
The remaining deficit will be reduced using a further £1.1million of funding made available to adult and children’s services as part of the recently announced Chancellor’s Budget.
Council bosses attributed the deficit to cuts in Hartlepool’s core government funding, which by 2019/20 will be 45% less than in 2013/14 – a reduction of £20.9m.
This includes the 2019/20 Government grant cut of £2.794m – a 26% cut, reflecting nine years of cuts in the funding.
This change has meant that in 2019/20 council tax will fund 62% of expenditure, compared to 50% in 2015/16.
A report from director of finance and policy Chris Little said the council has faced significant financial challenges and will continue to do so.
It said: “The 2019/20 deficit reflects the indicative council tax increase approved in February 2018 of 3.9%.
“Financial year 2019/20 will be the most challenging financial year the council has ever faced.
“Despite the Prime Minister’s statement to the Conservative Party Conference that austerity has ended, and the additional funding for social care announced by the chancellor, this is not the case for local authorities for 2019/20.
“The impact of austerity by 2019/20 will have resulted in nine successive years of Government funding cuts.
“This proposal will not change the total value of saving which need to be made over the next three years and simply defers a significant deficit to 2020/21.”
The funding from the council reserves would be coming from a dedicated ‘budget support fund 2019/20 to 2021/22 reserve’ and a remaining £4.062million would be earmarked in the reserve for further saving initiatives.
Council bosses warned in 2020/21 and 2021/22 deficits may increase if further Government grants are not implemented in these years and the 2019/20 social care funding is not sustained.
However, even if there are no further Government grant cuts in 2020/21 and 2021/22 the council said it will still need to make budget cuts of approximately £5.7m before the start of 2021/22.
Funding for future years will also depend on the outcome of the outcome of the government’s 2019 spending review.
Councillors on the finance and policy committee will be asked to approve the proposals at its meeting on Monday at the Civic Centre from 10am, which will refer them to full council for final approval later in the week.
Nic Marko , Local Democracy Reporting Service