Hastings Council Leader’s Report: January 2019 – Budget Special

Budget Special

Hastings Council Budget: A Perfect Storm

Over the last eight years, we have been faced with continuing year-on-year cuts to our government grants. Revenue Support Grant, the main grant we received from central government, has been cut over that period from around £10m, to nothing at all (it’s been replaced in small part by a business rate retention pilot scheme – see next article). This means that since 2010, the council has lost well over £40m, cumulatively, from a net annual budget of just £15m. So we’ve had to replace that funding wherever we can by raising money locally. We’ve done this by increasing fees and charges, raising Council Tax, and income generation, notably commercial property purchases, which have generated over £770,000 a year in additional net annual income.

The ‘net budget’ for Hastings Council is about £15m. But it’s worth considering what that actually means. Each year, Hastings Council has a turnover of hundreds of millions of pounds, through all the business rates it collects, and the total council tax and precepts it collects. However, it doesn’t keep most of that. The total Hastings Council budget is around £80m. Deduct the money we pay out in Housing Benefits (which is entirely funded by the government), and that brings the council’s gross budget down to around £28m. The way that’s funded is shown in the pie chart. Since 2010, the £10m Revenue Support Grant has disappeared, meaning that much more of the budget is now covered by fees & charges, and commercial rents. The council’s ‘net budget’ is the amount that’s funded from Council Tax, business rates, and some specific government grants. This expression of a somewhat arbitrary net budget is the way all councils are required to do their accounts by law, and how they’re supposed to explain their budgets – but it is misleading.

This year, we’ve seen a ‘perfect storm’ of cuts to our grant funding and massive additional pressures on our budget. The new refuse collection contract and street cleaning services will cost a million and a half more than the old contract, which collapsed before the end. Added to that, rocketing homelessness has pushed the bill for rehousing homeless people to over a million pounds a year. All of which means that we were facing a gap in our budget for the coming year of over three million pounds – 20% of the total net budget. We’ve had to cover that gap by a mixture of service cuts, efficiency savings, and income generation. There will be around fourteen council staff redundancies, in full time equivalents. However, thanks to careful management and vacancy freezes, there will be only one compulsory redundancy – all other staff affected will take voluntary redundancy, will be redeployed into vacant posts, or the posts we’re cutting are already vacant.

The cuts we’ve made to the budget are made up of many smaller items, but some of the more significant reductions include:

  • £117,000 savings to the grounds maintenance budget;
  • £100,000 in revenues and benefits staff (Universal Credit rollout means fewer people on Housing Benefit);
  • Reducing the park rangers from three staff to two (£40,000);
  • Reducing CCTV monitoring hours (£30,000);
  • Deleting the Cultural Development Manager post (this was a post set up to deliver the ROOT1066 festival in 2016, and was intended to be temporary), saving £64,000;
  • Ceasing funding the Herring Fair and Stade Saturdays, although we’re hopeful that the Foreshore Trust will be able to take these over;
  • Reduced contribution to White Rock Theatre, as agreed in the new contract with HQ Theatres last year.

We’re also considering making savings to the new refuse contract, by reducing the collection of recyclables in areas that currently get weekly collections to fortnightly, but install additional communal recycling facilities in those areas. Those savings haven’t yet been allowed for in the budget.

You can find the full list in the Budget Consultation Report at:

https://www.hastings.gov.uk/my_council/consultations/corp-budget-19/

The Hastings Council element of the Council Tax will increase this year by 2.99%, which amounts to £7.69 per annum for a Band D property, or 15p a week. This is the maximum allowed.

However, all that will only cover about half the gap, and we’ll have to take around £1.8m from our reserves. So over the coming year, we’ll have to find further savings, or generate additional income, to cover that gap next year.

There is some growth in the budget, too, although this is largely unavoidable spending, or spending that will help us save money in the longer term. Growth items include:

  • Completing the transition to online services, making all services and payments available online (£60,000);
  • Windows 10 and Office 365 licence (£87,000);
  • New staff to develop the Bohemia Quarter/White Rock Gardens project (£66,000);
  • Additional legal staff for enhanced enforcement (eg over flytipping) and house purchasing (£79,000).

But it’s not all bad news. We will continue to bid for external grants to fund projects that help us meet our priorities. We’ve been very successful at this, raising several million pounds over the last couple of years for additional targeted support for rough sleepers, a series of employment and community development projects in the most deprived parts of town, improvements to the seafront, funding to help our local fishery, and more. We’re also bringing our street cleaning service back in house, running it directly rather than through an external contractor. This will give us more control over the service, making it more responsive and helping us to improve standards of cleanliness across the town. We’ll also continue to look at new ways to tackle the challenges we’re facing, including homelessness, deprivation, and climate change, as well as continuing existing initiatives such as our support for cultural regeneration, and physical regeneration through the ‘Grotbusters’ scheme and private rented housing licensing, all of which have helped the regeneration of our borough and its local economy.

We will continue to generate new income where possible, for example through our own housing company that will start developing council-owned sites, energy generation, and other projects. We’ll also investigate marketing our award-winning ‘My Hastings’ online reporting and payments framework to other councils. And we’ll aim to cut the £1m+ we’re now spending on bed & breakfast accommodation for homeless households by buying homes to use as temporary accommodation.

This year will be our toughest budget ever. But we will do all we can to be more efficient, improve our performance and customer care, and get the very best for local people. But after this year, we enter an unknown future. This was the last year of the four-year budget settlement we get from government. During the coming year, the government will review the way it funds local government. At the moment, we have no idea how that will affect us. It could give us more money, or less. For the purposes of planning future years’ budgets, we’re assuming the amount of money we get from rates and Council Tax will stay the same – but it almost certainly won’t.

Overall though, the government appears to be saying that it won’t change the total amount available for local government, it will only shift it from one council to another. This won’t work – there simply isn’t enough money in the system to run local government. Local government financing is unsustainable, too much money has been cut from the overall budget to keep providing essential services across the whole country. This has to change.

Business Rates Retention Scheme

This year, Hastings Council has joined other East Sussex councils in a pilot ‘business rate retention scheme’, which means, on the surface, that we’ll retain more of our business rates locally. But headlines can often be deceptive, and this scheme is a good example of how opaque local government funding is. The first thing to note is that councils have no control over the level of business rates (also known as National NonDomestic Rates) – neither in the rateable value of properties, nor the level of the rate charged. The power of councils to decide the rateable value of properties was ended by Winston Churchill, when he was chancellor in the 1920s. The power of councils to set the business rate level was ended by Nigel Lawson during the 1980s.

Currently we retain 50% of business rates, of which:

  • 40% we ‘keep’;
  • 9% goes to East Sussex County Council;
  • 1% goes to East Sussex Fire and Rescue Service.

Next year we will retain 75% locally, of which:

  • 44% we ‘keep’;
  • 27% goes to ESCC;
  • 4% goes to ESFRS.

In Hastings, we will collect £21.7m in Business Rates, so the Hastings Council share goes up from £8.5m to £9.5m. However, we don’t get to keep all that. Business Rates are redistributed via a ‘tariff and top-up’ system. That means some councils have to give back the business rates they collect to government, for redistribution to other councils. And we’re one of them. Hastings Council is subject to a tariff of £5.5m, so we keep only £4m locally.

As going into the Business Rates pilot means that we lose all our remaining Revenue Support Grant, the final gain for Hastings Council is only about £50,000. As ever, other councils in East Sussex do much better. Wealden (by far the richest council in East Sussex, both in terms of the funding it has available and the income levels of its residents) will gain around £600,000 from the scheme.

This pilot is for one year only – next year, as I said in the last article, we don’t have a clue how it will all work, and how much money we’ll get.

Council Tax Reduction Scheme

A few years ago, the government replaced the old system of Council Tax Benefits with the Council Tax Reduction Scheme. Under the old system, government paid CT benefit in full. Under the new scheme, councils were given a grant that came to slightly less than the government were paying out in CT benefit, and were told to introduce their own scheme for allocating the grant by reducing the CT paid by people who used to receive CT benefit.

This grant was reduced in following years, then incorporated in the overall Revenue Support Grant, which has now been abolished altogether. This has left a million pounds Hastings Council has to find to replace CT benefits.

Because of this huge additional burden, many councils have cut back their schemes, and most introduced a minimum payment, meaning that everyone had to pay 20% – 50% of their Council Tax, no matter what their financial circumstances. Hastings Council has never done that and we’re very proud that we’ve been able to keep a generous Council Tax Reduction Scheme, which means that most people on out-of work benefits (75% of all our claimants) will still pay no Council Tax. We believe we will be the only council left in the country who does this for the coming financial year. Because of the extreme financial hardship that’s been caused by the early roll-out of Universal Credit in Hastings, we believe we need to do this to protect those who are least able to pay.

Solar Arrays

At its last Cabinet meeting, Hastings Council agreed to investigate solar arrays for sustainable energy generation, in three sites: two in the Country Park, and one at Upper Wilting Farm, near Crowhurst.

The report to Cabinet recommended commissioning various appraisals, which would take into account the ecological and visual impact of the installations as well as the financial implications. No decision is yet being taken on whether to go ahead with the proposal.

These three sites were selected as the best possible sites for solar energy generation after lengthy discussions with UK Power Networks and the council planners – they’re mostly south-facing slopes, close to an electricity sub-station, with less visual impact than other potentially good sites (in that they’re partially concealed by trees and hedges) and are on land that has no public access.

The United Nations Intergovernmental Panel on Climate Change (IPCC) report last October gave us a stark warning of the catastrophic consequences of not capping global temperature increases to 1.5 degrees within the next twelve years. To achieve that, all responsible local authorities and central governments have to do everything they possibly can to contribute to this target. As the production and use of electricity is by far the biggest factor in climate change through the release of fossil carbon, it is the responsibility of all of us to maximise sustainable energy generation wherever we can, particularly local authorities who are often significant landowners, as Hastings is. It’s unfortunate that the government’s continuing ban on onshore wind power generation is making that more difficult, and making it harder to prevent catastrophic climate change, but as a responsible local authority we have to do what we can within those constraints. It’s also unfortunate that ending the feed-in tariff for sustainable energy generation makes it harder to find viable sites for ground-mounted solar arrays, and that under the current government regime these three sites are the only ones that would be immediately viable.

Before commissioning any studies, we’ll contact Natural England to find out what they think. If they have no objections to the principle of solar arrays here, we’ll proceed with the studies. And if the studies reveal that the solar arrays have negative environmental consequences, particularly for the neighbouring SSSI in the Country Park, then we wouldn’t go ahead. But if those studies demonstrate that the schemes are viable and can be installed with negligible environmental effects, the installation would then be subject to a pre-application planning consultation.

But in the end, if the only reason for opposing it is one of aesthetics, that would not seem to be a good enough reason. The challenges we face from climate change are far too great to reject proposals for sustainable energy generation solely because it spoils the view – the same arguments can be made against solar arrays, wind turbines, and other sustainable energy generation everywhere. Solar arrays are being installed in many rural locations, including AONBs. They’ve been approved, for example, in the Gower Peninsula, North Wessex AONB, the Cotswolds, and indeed in the High Weald AONB, near East Grinstead.

Needless to say, there’s a lot of local opposition to all of these. For most of these sites, the profits generated will go into the pockets of shareholders, as they’re being built by a private company. For any that Hastings Council develops, surplus income will be used to fund public services.

So, as a matter of principle, we must consider all possible opportunities for sustainable energy generation. If we’re to keep the lights on and our cars running, and prevent catastrophic climate change, then we will have to overcome personal objections. We’re all going to have to be a bit less selfish and more tolerant of sustainable energy generation that does no environmental damage if we’re to deal with the huge problem that’s facing us.

That’ll do for now – if you’d like more information on any of this, leave a message on 01424 451066, or e-mail at cllr.peter.chowney@hastings.gov.uk

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