Transformation and Savings Plan aims to tackle budget deficitPublished Wednesday, 8th September 2021
Councillors will next week be asked to support the development of a multi-year Transformation and Savings Plan to tackle the budget deficit facing Hartlepool Borough Council.
The authority currently faces a cumulative deficit of £11.435 million for the years 2022/23 to 2024/25.
The Finance and Policy Committee which meets on Monday, will be asked to take the first step towards the development of a sustainable plan by agreeing to support annual Council Tax increases in line with national referendum limits. The alternative would be to address all of the deficit by cutting services.
A report to the committee is recommending a Council Tax rise of 1.9% (subject to confirmation of a 2% referendum limit) and a 3% increase in the Adult Social Care Precept for 2022/23. The precept was deferred from 2021/22 as councils had flexibility to implement this in either 2021/22 or 2022/23. Most councils implemented it in 2021/22 as average Council Tax increased by 4.4% when Hartlepool had a freeze. The report is also proposing indicative Council Tax rises of 1.9% for 2023/24 and 2024/25.
The increases will generate vital recurring income and reduce the overall deficit to £7.523 million.
To mitigate the impact on low income working age households, it is also proposed that the Council maintains its Local Council Tax Support Scheme at its current level of 12%.
The report says: “The current 2021/22 budget was set on the basis of freezing Council Tax and the significant use of one-off resources. However, it was recognised that this is not sustainable and deferred a significant budget deficit to 2022/23. Our reserves are low in comparison to other councils and only a limited amount is available to support the budget.
“Since 2015/16, the Government have shifted the burden for funding for local services from a national grant to Council Tax and expect Local Authorities to raise Council Tax to cover the difference. This means that maximising increases in Council Tax in line with national referendum limits will help to protect services. Not increasing Council Tax will lead to more difficult decisions on service reductions.”
The Council is also pressing the Government to make the Council Tax system and funding for local authorities fairer, and recently sent a letter to Robert Jenrick MP, Secretary of State for Housing, Communities and Local Government.
Councillor Shane Moore, Leader of the Council and Chair of the Finance and Policy Committee, said: “Following a Full Council meeting on 8th July, a joint letter was signed by myself, Councillor Mike Young and Councillor Brenda Harrison setting out the Council’s concerns.
“We asked the Government to undertake a full Council Tax valuation - the system cannot continue to use 1991 property values which are now 30-years-old. It is perverse and unfair that people living in houses worth millions of pounds don’t pay more Council Tax – and often pay the same as a typical Hartlepool households – simply because properties have not been valued since 1991 and values have risen significantly in some parts of the country.
“We also asked the Government to provide additional funding to enable Council Tax to be frozen and to implement the Fair Funding Review – which would provide a fairer basis for allocating grant funding to councils.
“I appreciate these issue will not be addressed until the Government completes the Spending Review later in the year but I have concerns significant national changes will not be made. Therefore, it needs to be recognised that, in the absence of additional government funding, there are no other easy options and the Government will expect us to increase Council Tax in line with national referendum limits.”