This budget will be toughest ever

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IT barely feels like five minutes since the Cabinet, or what was left of it, signed off the budget proposals for the current financial year yet next week, the formal budget setting process for the following financial year kicks off again in earnest.

It is not a process I am looking forward to. Over the coming months and at the risk of sounding like a broken record, I will use this column to try and explain and guide people through each step of the process and attempt to clarify the reasoning at every opportunity.

I’ve said this each of the last three years but I will say it again; setting next year’s budget will be the most difficult one I have ever had to encounter

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The further cuts that are being imposed on us from the Government from what is already an extremely meagre budget will be crippling.

The last two years has already brought unprecented cuts to Local Authorities and a council the size of Hartlepool, one of the smallest unitary authorities in the country, does not have the economies of scale to absorb the level of cuts forced upon us without inevitable consequences to services and jobs.

If things weren’t difficult enough, the politics in Hartlepool over the last twelve months have made setting a sound financial strategy extremely tricky.

Saturday’s Hartlepool Mail did a good piece on to outline some of the financial risks and challenges that lie ahead over the forthcoming year and that makes up the report that will be considered by the Cabinet on Monday.

As the budget setting develops and that report is taken in context and alongside everything else that is happening, like the welfare reforms and like the local cuts that will have to be made to bridge our budget deficit, it becomes quite a scary prospect.

It’s fair to say that virtually every person in Hartlepool will be directly or indirectly affected by these cuts and unavoidably, it is going to be those who are more financially vulnerable and those who rely on public services most who will be worst affected.

It virtually mirrors the Government’s national plans for cuts to Local Authorities in that it is areas of the country that need most support are being worst affected.

Hartlepool and the North East falls directly into that category and when you compare the impact these cuts have on us as opposed to the South East, it is grossly unfair and blantantly politically biased.

One of the reasons we have managed to already cut more than £10m out of the budget over the last two years with a minimal effect on jobs and services can be put down to good financial planning.

We identify risks as early as possible and put things in place to try and minimise the impact of these risks.

Sound budget management is also a contributing factor to keep our heads above water and the fact that we can deliver an underspend year on year shows that every penny is been carefully monitored and accounted for.

There are always going to be many factors outside of our control however, so we need to be able to react quickly to emerging Government policies.

Monday’s report on the financial risks that face the Council clearly sets out the scale of some of the problems that lie ahead and moreover, how we propose to address them. There is a separate report on the localisation of council tax benefits, which is part of the Government’s welfare reforms.

When this kicks in, I believe it is going to be one of the most controversial policies of all and has the potential to have ramifications similar to those around the poll tax in the eighties. Councils really are being handed the dirty end of the stick with this one and there is virtually nothing we can do about it.

As it stands at the moment, the Government funds the shortfall in council tax for those who can’t afford to pay any or some of their council tax bill.

In April, they hand the system to Local Authorities but cut 10 per cent of the funding that comes with it. In Hartlepool’s case, it will be around £1.1m to £1.3m.

Councils then have Hobson’s choice of either handing on this 10 per cent cut directly to the recipient of the benefit or paying it themselves. The latter option is not really an option at all as even the most affluent councils cannot afford to absorb this cut.

With certain groups, including pensioners, protected from the cut, it will mean the rest will face around about a 20 per cent cut in their Council tax benefit.

This will come on top of cuts to housing benefits, job seekers allowances and others. There will be a huge financial impact on thousands on households in Hartlepool and with everything coming at the same time, it is going to be a nightmare situation.

The council will do what it can to soften the impact of these changes but our ability is going to be very limited.

I said a long time ago, we are well past the point of moaning about it as it’s going to happen regardless.

The best we can do is try and inform and prepare people for what will undoubtedly be a turbulent journey over the next couple of years.