MAYOR ON WEDNESDAY: Budget blues

IT’S the time of year when work on next year’s budget really starts to intensify.

The Cabinet is currently undertaking an initial round of consultations on the early proposals and I’m afraid the situation is pretty bleak.

I’ve said many times before that we have long stopped complaining about it and pointing the finger of blame at people. The fact is we are going to have a lot less money over the coming years and will have to make extensive cuts in order to get the books to balance.

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We have been planning for these reductions for a number of years but it can be extremely difficult in an environment that is constantly changing.

The Government never make it easy for councils to set a long term plan and we are still not even aware of exactly what our grant settlement will be for next year.

They were due to announce this at the beginning of December which would have given us around three and a half months to set our budget.

But yesterday, the Government informed us that they will now give us the information on December 21, the day they break up for Christmas. Not only does it give us less time to plan our budget but I suspect that the settlement will be worse than we think and the civil servants will no sooner have pressed “send” on their computers, than they will have disappeared for their holidays so they don’t have to face the backlash.

Regardless of the details of future Government funding to the council, we will have to save somewhere between £19m and £21m over the next four years.

That will be a cut of up to nearly a quarter of what our budget is this year. This is on top of the £10m we have already cut over the last two years.

Added to this is a risk that we may have to fund one off costs over nearly £5.5m due to circumstances that will not be in our control.

All this comes at a time when the Government’s welfare reforms will kick in, business rates will be localised and people will be hit left, right and centre.

One of the most contentious issues as always is that of council tax. Once again, David Cameron has announced that he is doing everyone a huge favour by trying to force Councils to freeze the council tax and funding the equivalent of a 1 per cent rise for one year.

No one likes paying more taxes and on the face of it, this gesture appears to be helping the public. What it is actually doing though, is storing up a much bigger problem for next year and for future years.

If a council puts up the council tax by 1 per cent, they will get that extra 1 per cent of income for every year afterwards.

What the Government are doing is effectively covering the gap for one year only.

After that the council would have to cut its services elsewhere to the equivalent of that 1 per cent.

They constantly bang on about localism and shifting powers down to a local level.

Council tax setting is about the only opportunity a local authority has to control its own income but they are also capping the rise to 2 per cent.

It is a complete contradiction to what they are saying in their sound bites.

I’ve talked about the localisation of council tax benefits before and how it is going to adversely affect many people in Hartlepool who have previously had support on paying council tax.

People receive a council tax benefit because they simply do not have the means to be able to pay.

What makes the government think that people will now be able to conjure up £150 to £200 to contribute towards their council tax?

This will undoubtedly have a knock on effect on the council’s collection rates and we will have to put more resources into chasing up non-payments.

The whole think is ill thought through and will have disastrous consequences.

It does raise the question as to whether Hartlepool Borough Council should consider taking the Government grant this year, until we know exactly have the benefit changes are going to pan out and what effect it will have on our cash flow.

There are very valid arguments that we should ignore the government grant and raise our council tax in order to help protect the longer term future of our services.

There is even an argument to think about challenging the Government’s capping level and putting real localism ahead of their bullying threats.

This can be very much countered by the will to protect people’s pocket in the short term, as the council decided to do last year by taking the grant and freezing the council tax.

More pertinent to that argument this year though is that to raise the level of council tax at the same time as the council tax benefit changes kick in could well be self defeating and would it be more sensible to deal with one thing at a time?

These are the sorts of questions the cabinet is currently asking as we move through the budget setting process.

We are involving as many sectors of the community as possible in these consultations.

All councillors are being asked to feed in their views to the budget process as ultimately it will be a decision for the full council.

I don’t have to remind people that last year’s process was hijacked at the last minute by some councillors with their own agendas.

I sincerely hope that we don’t get the same stupidity this time around and if councillors have a genuine concern with any part of the budget, they will make their views known now.

It is far too important a problem to turn into a political game.