Leaked LGA presentation raises concerns about state of Hastings Borough Council's finances

Earlier this year, the Local Government Association (LGA) was invited to undertake a peer review of Hastings Borough Council’s finances, in light of the authority’s well-publicised difficulties in that area.

A full report from the review has yet to be published, but the LDRS understands that key council figures were briefed on the LGA’s initial findings in March of this year.

While that briefing was not held publicly, part of the review team’s presentation has been leaked, revealing that the LGA had raised some significant concerns in several areas.

A Hastings Borough Council spokesperson said: “The LGA Peer Finance Review has not yet been published. Currently our officers are discussing a draft with the LGA and suggesting corrections to factual errors. As soon as this has been done, the report will be published alongside a response from HBC.

“These reviews are designed to challenge and support local authorities to improve their financial management. So we welcomed the LGA team here, and look forward to the final report. We know that this review needs to focus on our local housing crisis, as the financial impact of more than 1,000 residents needing temporary accommodation is the main risk to the council being able to balance its budget.

“Tough messages on this are important, as the scale of the housing crisis means tough decisions for the whole council. And the need for tough decisions were clearly flagged up in the budget set by Full Council in February. The budget agreed cuts, and in addition, since then, a wide range of other changes have been implemented.

“So we will welcome the continued experience provided by the LGA in assessing the degree to which these changes are tough enough, and if we have the balance right in continuing to provide vital services for Hastings at the same time as further tightening our financial commitments.”

The council’s financial woes are no secret. In September last year the authority’s chief finance officer Kit Wheeler warned cabinet members that he may be forced to issue a s114 notice unless the council is able to improve its financial position.

By issuing the notice, something he would legally be required to do if the council was unable to balance its budget, Mr Wheeler would effectively put a stop to any non-essential council spending.

The leaked presentation shows that LGA reviewers shared Mr Wheeler’s concern and said it was likely he would have to issue the notice within the 2023/24 financial year if the council’s revenue budget position was not addressed.

In it, the LGA reviewers also said the council would have to make ‘difficult decisions’ — such as selling surplus assets — and carry a comprehensive review of its spending.

Other concerns raised in the leaked presentation include the council’s approach to reducing homelessness costs. In it, the review team says the council’s purchasing of property to use as temporary accommodation (in an effort to reduce its bill in this area) would ultimately just add to its annual budgets due to the need for borrowing. They said the council should focus its resources on homelessness prevention instead.

The review team also raised concerns about the council’s arrangement to build a hotel on the Cornwallis Street Car Park site, saying it would lead be a loss of money in the short to medium term.

The leaked documents also show that the LGA reviewers were concerned about the level of general reserves held by the council, saying that the council looked set to use them up by the end of March 2024.

Papers due to be discussed at the council’s next cabinet meeting (to be held July 3) do paint a slightly rosier picture, however. In the papers, officers report that the council used less of its reserves than it expected to in the 2022/23 financial year.

The report goes on to note that the council has reduced its capital borrowing, which will lead to a year-on-year saving.

The upshot is the council’s reserves are in a better position than in the figures considered by the LGA, meaning its concerns about a depletion by March 2024 are likely out of date.

Following the leak, Cllr Julia Hilton, leader of the council’s Green Party group, called on the council’s Labour leadership to ensure it publishes the full report and its action plan without further delay.

She said: “It’s no secret that things are looking pretty bleak. However this review emphasised the urgency of acting ‘at pace’ to have any chance of stopping the council going bankrupt.

“Here we are three months further on with no sign of the final report or any sort of action plan despite knowing the urgency for savings a year ago.

“When will the Labour group share their plans so all councillors can input into the urgent need to reform the council’s finances?

“Labour has been running this council for over 15 years and constantly seems to be unwilling to take the necessary steps to put our finances in order.

“In fact it has added to the financial pressure by going ahead with the highly risky plan to build a hotel for Premier Inn on Cornwallis St car park. The car park has now been closed for over a year with a loss of hundreds of thousands of pounds of parking income.”

Cllr Andy Patmore, leader of the council’s Conservative group, was more reticent to comment. He said: “The report has not been finalised and reconciled between the LGA and Hastings Borough Council as far as I am aware. Until we see the final report it won’t be possible to comment on its contents.”