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Hampshire takes firm action to close £80million gap

Friday, 12 July 2013

Hampshire County Council will determine the actions needed to tackle a forecast budget deficit of around £80m, by 2015, when the Cabinet meets on 22 July.

The forecast £80million deficit is the result of the latest period of austerity for all local authorities that could continue to 2020.

Government recently announced a further 10 per cent cut in grant for councils in 2015/16 and this is on top of the 43 per cent grant loss Hampshire has suffered over the four years of the current spending review.

However, because Hampshire planned ahead and took early action to secure £130m savings over the last few years, by reducing the costs of its services, it is in a strong position to deal with the challenges that lie ahead.

While final decisions on spending and council tax levels are not set until February 2014, a strategy is already well underway for the transformation of services to make more savings and generate additional resources to cover further cost reductions, while protecting front-line services.

The appropriate use of reserves continues to play an important part of the strategy to close the gap.

Council Leader Roy Perry said: "There is national pressure to avoid council tax rises, which we in Hampshire endorse, as demonstrated by Hampshire having one of the lowest council taxes in the country, and the lowest in the south east. This relatively low level of council tax is achieved despite Hampshire receiving the third lowest grant per head of all county councils. Hampshire receives just £115 formula grant per head, compared to the average for county councils of around £180 and the highest grant, which is £250.

"We have kept our council tax at the same level for four years running. With further grant reductions, increasing pressures on social care, particularly for the elderly, and inflation all adding at least £30m to £40m to our costs every year, we do face a significant financial challenge. But keeping the council tax as low as possible, while providing the best quality services, will remain our priority.

"Acting early and decisively means time is on our side, avoiding the prospect of urgent or drastic decisions.

"Another major benefit for Hampshire is our reserves. Having resources to invest in redesigning services, to make them more efficient, particularly in terms of cost and quality, will deliver better results for residents. Very few other councils are in such a strong position as Hampshire. We must not spend reserves for one-off reductions in tax but we can use them to make the council more and more cost effective.

"Reserves are being used to pay for the transformation of services and to drive out efficiencies for the next stage of savings. Had we had used them to prop up the gaps in the budget they would be drained now, and Hampshire would be in a much weaker position with increasing risks to services."

Funding was set aside in the 'grant equalisation reserve' to soften the blow of the cuts the Council had anticipated and those funds will be used over the next few years to help bridge the gap. Further savings are expected to be made from more reductions in senior management posts, savings in procurement and IT and more rationalisation of office space. Additional savings will come from sharing capacity and costs through more partnership working and building on income opportunities.

Cabinet will also discuss the approved Capital programme, which still stands at well over £500m for the next three years and represents a significant investment in the county's infrastructure and economy. A review is likely to ensure it reflects policy priorities to improve the quality of life for Hampshire residents.

The Cabinet meeting can be watched live or afterwards from the archives.

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