Councillors in Kirklees have delayed a meeting which will set next year’s budget – and the council tax.
The Government has increased the maximum amount councils can raise council tax bills by from 2.99% to 4.99% – and the Government expects councils to impose the maximum rise, a meeting was told.
Last year Kirklees Council raised council tax by the maximum 2.99% to invest in what it called a “budget for recovery.”
The council usually meets in mid-February to set a new budget and the council tax but this year, amid continuing pressures and uncertainty, the budget meeting has been pushed back to March 8.
The council said last November there would be a £34.4 million budget shortfall and a series of cost-cutting measures were implemented.
The council’s costs have increased significantly due to cost-of-living pressures, rising energy prices and wage inflation. Council staff had an average wage rise of 7.6% last year and the cost of heating and lighting rose by more than £12 million.
In a bid to bring down the deficit, a recruitment freeze was imposed on “non-critical” roles; some buildings were mothballed; heating was set at lower temperatures; some staff were asked to work from home; and all new spending was reviewed by senior officers.
The council’s current financial position was examined at a meeting of the Corporate Scrutiny Panel at Huddersfield Town Hall on Monday.
The panel heard from the council’s finance director Eamonn Croston who said the council aimed to save at least £4 million from the £34 million overspend by the end of the financial year. There were still too many unknowns to put an exact figure on the savings, he said.
The £30 million overspend would be met from council reserves, built up over many years.
In December the Government announced the funding allocation for 2023-24 and Kirklees is to receive an extra 9.6% on its £335 million budget, around £34 million.
But, said Mr Croston, the Government expected councils to increase council tax by the maximum 4.99% though “that’s a matter for individual councils.” That decision will be taken at the budget meeting in March.
Councillors expressed concern over the financial crisis and wanted more detail. Clr Tyler Hawkins (Lab, Dalton) said: “This is affecting everyone.
“Every local authority from Kirklees to Kensington is in the same boat, it’s just that the boat feels like the Titanic. We have delayed the budget meeting but we will need that information as there’s not long left.”
Panel chairman Clr John Taylor (Con, Kirkburton) said the council should have moved much quicker to tackle the projected overspend.
“We have known since last September,” he said. “We should have moved faster and harder. The longer you allow things to run it has a long-term adverse impact on the financial position of the council and also the financial position of our residents.
“The only way we can recoup our reserves, in reality, is by collecting more council tax. If we had recognised there was a red light flashing here we should have taken some of these actions much quicker, much swifter.
“We should have reacted like we did during the pandemic where we pivoted very quickly – our staff were superb in how they adapted and worked in different ways and even in different directorates almost – but we haven’t done that this time.”
Addressing Mr Croston, he said: “We are a month and a half before the year end and you still cannot tell me how much we will save this year. That for me is disappointing. We need to look at why we didn’t act like we did during the pandemic, at speed, at pace.
“You can only spend reserves once. They take a long time to build up but they can be spent very quickly. Every week that we continue to not take actions we are putting more and more reserves at risk.”
The council Cabinet member for corporate services, Clr Paul Davies, hit back at Clr Taylor and said: “That’s an opinion. It’s not based on fact. There’s been a huge amount of work and, in terms of the directorates, they have responded very quickly.”
Clr Taylor replied: “We identified in September we had a 10% overspend and we put together a target to reduce it by 1% and I don’t think that’s ambitious enough.”
Clr Davies said the overspend would come out of council reserves and added: “We are all clear there’s going to be a significant burn on our reserves.
“Not so long ago we were having conversations that we had too much reserves and should be spending them.
“Now, unfortunately, we are having to use reserves in line with Government expectation because Government says we should be using reserves to meet some of these demands.
“However, that’s not sustainable going forward and certainly for the next financial year there will have to be tougher cost saving approaches taken next year in order to meet our budget gap for next year.
“For this year what we have tried to do is balance a level of services during an extremely difficult time for our citizens with cost savings and additional use of reserves so we have that balanced budget.
“The work being done at the moment is laying some good foundations for the increased work that has to be done in terms of cost savings for the next financial year.”