Thanet council faces a budget shortfall ‘upwards of £1.5 million’

Income

Thanet council faces a budget black hole of ‘upwards of £1.5 million’ next financial year (April 2020-March 2021).

The shortfall comes amid plunging income from Government. The Revenue Support Grant to Thanet from central government was £97,000 for the 2019-20 financial year. In 2018-19 it was £809,000 and in 2017-18 the grant stood at £1.446m. This is compared to £6.636m in 2013-14.

A one year settlement will be made for 2020-21 with amounts to be confirmed later this year. Plans to end the government revenue support grant from 2020 have now been rolled forward to 2021

The 2019-20 budget for Thanet council faced a £1.8 million shortfall. To reduce this councillors agreed to ditch £500,000 funding to keep Ramsgate port in readiness for a ferry operation and axe a further £130,000, totalling £630,000 (or £730,000 in a full year) from port spending.

‘Severe implications’

However, the council’s corporate risk updates show Thanet still faces high risk associated with limited resources.

In an update to councillors Chris Blundell, of Financial Services, said: “The high score for Limited Resources reflects the fact that it is one of the few risks that in extremis could result in the council losing control of its own destiny.

“Due to national political uncertainty and an unresolved Brexit, the chancellor has confirmed that councils will now get a ‘one-year roll-over settlement’. This has severe implications for accurate financial planning in the Medium Term Financial Plan and any longer term planning.

“Due to the government’s focus on Brexit, the Fair Funding Review, planned to be implemented in 2020-21 is also at risk of slipping to 2021-22. Therefore, the likelihood and severity of the impact of the risk becoming manifest e.g. TDC having to terminate services, make large-scale redundancies and/or be externally governed or managed, remains high, not only now but for the immediate future.”

The meeting was told that Kent had been unsuccessful in a bid to enter the 75% business rate retention scheme pilot. This would have allowed the council to retain 75% of the income from any growth in business rates.  Thanet will now remain in the 50% retention scheme for 2020/21.

There is an opportunity to increase council tax by up to 2% without the requirement to hold a referendum to raise funds. It was hoped that the increase level would be increased to 5% but this has not been the case.

‘Long way to go’

Thanet council’s deputy chief executive and finance officer Tim Willis confirmed the £1.5 million funding gap during a council meeting on Tuesday (October 22) during a discussion on raising fees and charges by 2.5%. This would raise an extra £208,000 but Mr Willis said: “We have a £208,000 assumption of extra income from higher fees and charges but the budget gap is upwards of £1.5million – and that’s after the £208,000 so there is an awful long way to go.”

Budgets and the law

Local authorities are required by law to have a balanced budget. There is no legal definition of what constitutes a balanced budget, although legislation does say a budget is considered not to balance where the increased uncertainty leads to budget overspends of a level which reduce reserves to unacceptably low levels, or ­ where an authority demonstrates the characteristics of an insolvent organisation, such as an inability to pay creditors.

If the council’s chief finance officer judges that the authority is unable to set or maintain a balanced budget they must consider the possibility of a Section 114 notice. Such a notice is only given in the gravest of circumstances. The process is governed under legislation and once issued the council has 21 days to consider a response. However, during that time spending and other financial activity is suspended.

The notice also results in the loss of financial control by the leadership team. External audit would then become involved during the process.

Looking for examples

Cabinet Member for Financial Services & Estates, Cllr Rob Yates, told Tuesday’s meeting: “The authority remain under financial pressure. I have asked officers to look at best practice in other councils to see if we can do things more creatively.”

Thanet District Council is currently asking 6,000 residents to tell them what they think about the services the authority provides and  if a service they use were to be reduced or cut, which of the range of options available to the council they would be most willing to support.

The results will be published by the council and will be used to help inform its budget and service priorities.

Thanet’s 2020-21 budget is due to be discussed by cabinet members on November 14.

Final approval of Thanet’s budget will take place on February 6, 2020.

18 Comments

  1. Cllr Yates – doing things more creatively? It’s the lack of professionalism, stupidity and fantasy projects of the Senior Management Team over recent years that has plunged this area into deficit. Ask Craig MacKinlay MP what to do – it is his government with austerity and the botched localism scheme that is wrecking the lives of local people. And they want to damage us further with a Brexit deal that will make life even worse for us all.

    • Surely it’s a lack of funding as the article proves. Nothing to do with Thanet council is all too do with a Tory government. When the general election happens vote for the party that will support local councils and communities namely labour party. A vote for the Tories will see all services privatised and you paying more for less so they make a profit for shareholders

  2. Don’t vote for a government whose ideology is to cut, cut, cut taxes and therefore public spending.
    The Revenue Support Grant has been cut by the government by £6M in six years, at the same time restricting the ability of the Council from raising tax by more than 2%
    It’s not rocket science. Not enough money coming in = not many services.
    Don’t vote Tory in the next election.

    • The council has in effect two budgets. One for capital programmes and one for operational costs. You can’t use the capital one too subsidize the operational one. (Local government finance rules)

      • Utter nonsense, you just propose the idea to the board that it’s in the public’s best interest to pull the 3mil out of the capital budget and spend it where it’s best needed, it’s only where money has been donated for a specific cause, ie charitable where you can’t legally change its use.

    • It is under this Tory govt that Grant’s to TDC has been cut by 6 million pounds.
      It was the Tory TDC that decided to spend £2M on a station noone wants, and £3M on tarting up Cecil Towers.
      So yes, it does matter who you vote for.

  3. Wasn’t this predicted? The Tory government kept cutting back on all our services by telling us it was all due to the 2008 Wall Street crash. We had to bail out the entire banking system so we all had to suffer (I’m not sure we ALL did, actually).
    But now, as that excuse for austerity grows stale (blaming the Labour government for it was always a bit of a stretch as Gordon Brown wasn’t the Prime Minister for New York Banks, as I recall) we need a new excuse for reducing our services while cutting taxes for the very rich. Now, its called “Brexit uncertainty”. In fact, there is nothing “uncertain” about it. Brexit WILL hit all our finances and will provide an excuse for poverty and decline in Thanet for years to come.Better get used to it. I don’t see the grumbling voters of Thanet getting rid of their Tory MPs any time soon. Lots of grumbling about things but, when it comes down to the vote, too many just vote for more of the same. Never mind, blame the EU. It usually works.

  4. Having lived here since 1976 I have seen the poorly run council of any political colour go from bad to worse every year. Never have services been this bad. Cuts or no cuts money is wasted on pipe dreams. Time to leave this area I think.

  5. It is far too simplistic to blame it on Government grant being cut. Neighbouring Councils seem to be managing OK without the constant crisis we see at TDC. As someone else said, there have been a litany of really poor decisions made by senior managers who frankly aren’t up to the job. I wouldn’t just see what other Councils are doing but would actually go to Canterbury and beg them to take TDC over. It doesn’t matter which Politicians are in charge at TDC, all the time you have inept people around the top table you are asking for trouble.

    • Was it senior managers who recommended banning live animal exports, costing us £millions? No, it was councillors.
      Was it an officer decision to sell off the freehold to Pleasurama, rather than end the contract? No, it was the councillors.
      Was it the officers who rejected the draft local plan, resulting in 1000s of housing being built on green field sites in the villages?
      You’ve guessed. It was the councillors.

  6. Over the years how much has been wasted on, pleasurama, ramsgate harbour, live animal exports, paying off chief execs early, ramsgate tunnels, legal fees and associated compensation, dreamland (plus costs to come) , the multistorey car parks, alledgedly there are a few other nasties yet to fully uncover (not including the EKH fiasco).

    It all adds up and leaves us in the position we’re in, no ones perfect but balance of probability is that over the years TDC (of all hues) has made more than its fair share of bad decisions. You can’t expect central gov. to keep bailing out endless ineptitude.

  7. Now I can see why they want to set up a Margate Town Council
    So they can get more money out of us stealthily through the council tax

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