Hartlepool council tax set to rise as expected budget deficit more than doubles

Hartlepool Borough Council finance chiefs have warned since the last budget update there have been “significant external financial pressures” impacting their position such as rising inflation levels.

It means officers are estimating a net budget deficit of £10.125million across 2023-24 and 2024-25.

This is up from the £4.363million predicted in June.

A report from director of resources and development Chris Little notes this will be even greater if a council tax increase is not implemented for 2023-24.

Therefore councillors are being recommended to back a 2.9% overall rise.

This consists of a general 1.9% rise with an additional 1% increase to support the adult social care precept.

Mr Little’s report states pressures facing the council are affecting “the whole of the public sector” and the new Prime Minister Liz Truss will “quickly need to develop a plan to support the economy”.

It said: “The financial challenges facing the council in the current and the next two financial years come on the back of a period of austerity following the 2010 financial crisis.

“The main factor impacting on the budget is now inflation, which was initially driven by high energy/fuel costs and is now spreading into other cost areas and pay settlements.

“The reality of the financial position facing the council is that service reductions will be the greatest contribution to addressing the deficit as previous measures have already reduced the workforce by 20%.”

The report added reliance on council tax income has increased significantly over the years.

It currently makes up 42% of local authority resources in 2022/23, up from 29% in 2013/14, marking “a £15m shift in funding on to local taxpayers”.

Officers acknowledged council tax increases are “always difficult as unlike most other taxes they require an annual decision”.

Issues which have contributed to the external financial pressures include the National Employers Organisation pay offer, Bank of England interest rate increases plus inflation.

A review of council reserves will be carried out shortly while initial savings proposals will be drawn up.

The latest report is to go before the finance and policy committee on Wednesday, September 28, and full council the following day.