Hartlepool council tax warning as finance chief warns at least 3% rise in bills needed to keep finances 'robust'

Hartlepool Borough Council finance officers have warned upcoming decisions over council tax rates will be ‘probably the most important decisions that will ever be made’ in regards to the authority’s budget.

The council’s Finance and Policy Committee will on Monday make budget recommendations for 2021/22, including the council tax rate, which will then go before all councillors for final approval.

A report ahead of the meeting from Chris Little, council director of resources and development, warned the most ‘sustainable option’ would be to increase council tax bills by 5%.

This would be made up of a 2% increase of core council tax, along with a 3% adult social care precept, the maximum increase allowed by the Government’s limits.

Council leader Shane Moore previously said the leading group would be aiming for a council tax freeze this year.

He also branded claims by the Labour Group that a 5% increase would be proposed as ‘fake news’.

Maximum rise in council tax ‘most sustainable option’

Mr Little, in his report, states the decisions made in regards to the budget will ‘provide the financial foundations’ for the council’s future ahead of the all out election planned for May this year.

He said: “The Government’s national council tax policy for 2021/22 continues to shift funding of local services from national taxation on to council tax.

“The decisions members make in relation to the 2021/22 budget are probably the most important budget decisions that will ever be made as they provide the financial foundations and legacy for the new council to be elected in May 2021.

“The most sustainable option for the council is to implement the maximum increase in council tax and the adult social care precept allowed by the Government’s referendum limits.

“For the avoidance of doubt, any proposals to increase total council tax (including the adult social care precept) by less than 3% would not, in my professional opinion, be robust.”

He added the second most sustainable option would be a 2% core council tax increase, with an element of the adult social care precept implemented in 2021/22 and the balance deferred to 2022/23.

The third most sustainable option would be to implement the full 3% adult social care precept in 2021/22 and no core council tax increase, according to officers.

Mr Little’s report also looked at the longer term impacts of setting various levels of council tax.

If no council tax rise or adult social care precept were implemented, the council would defer a deficit of just over £4million to 2022/23.

This would mean they would have to use around £5.2million from the council’s budget support fund for 2021/22, leaving around £3.4million uncommitted for future years.

If an overall 5% increase was implemented, the council would receive an additional £2.135million in recurring council tax and adult social care precept income and would defer a deficit of £1.912million to 2022/23.

In that instance just over £3million would have to be used from the council’s budget support fund, leaving over £5.5million uncommitted going forward.

Mr Little adds funding increases for local government ‘will not be a priority’ going forward and future financial issues are likely to be faced in the coming years.

He said: “It is clear that funding increases for local government will not be a Government priority in 2022/23 and future years.

“The best potential outcome will be a multi-year cash freeze in Government funding, which is the current planning assumption for 2022/23.

“Against this background the council will continue to face an extremely challenging financial future, which further underlines the importance of the 2021/22 council tax decisions.”

The report notes this all comes off the back of the council facing nine years of austerity up to 2019/20, with previous Government grant cuts having a disproportionate impact on more deprived areas, including Hartlepool.

The council has addressed the recurring reduction in resources and increased costs from a combination of efficiencies and cuts.

Over the nine years up to 2019/20 the council removed 500 jobs – a reduction of 20% according to officers.

Councillors on the finance and policy committee will make a decision on if they want to propose any rise in council tax and set any level of adult social care precept on Monday, which will then be referred to full council.

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