Hampshire County Council has warned it faces a “financial meltdown” and has issued a plea to the government to help it and many other authorities plunging into effective bankruptcy.
The Conservative-run council has to cut spending by £132 million by April 2025 and sweeping spending reductions may see huge cuts to services.
This may include axing school crossing patrols, cutting funding for road repairs, ending funding for community transport services and slashing spending on museums and cultural sector.
Even after these cuts, the council says that without a major overhaul of local authority finances in England, it could face insolvency by 2026.
It says it can’t simply make operational cuts and council tax rises to balance the books without ditching “safe” levels of core service.
A paper to a meeting of the council’s cabinet next week says that “these are not problems we can fix on our own and that the government must intervene if we and the whole of the local government sector are to avoid financial meltdown”.
Last year the council published a joint letter with Kent County Council to Prime Minister Rishi Sunak warning that failure to properly fund local government in England would see the two councils “sleepwalk into financial disaster”.
The situation has not improved since for either council and Kent’s auditors said last month it may have to issue a section 114 statement of effective bankruptcy.
Last month Birmingham city council declared itself effectively bankrupt last month and several others have said that they may suffer the same fate.
Hampshire’s is already planning to allow for the ‘bare minimum’ of services across the county – while axing others – in a massive effort to cut its costs.
If approved, proposals include turning off some street lights at night, new parking charges and cutting back on day-to-day repairs such as dealing with potholes or drainage cleansing.
It is also looking to increase the Council Tax and continue to use its reserves to pay for services as it looks to make savings of £132 million to balance the budget by 2025/26.
The initiatives will impact all sectors with cuts, reductions to “bare minimum levels” – what councils are legally required to provide-, fee increases, and an in-depth change in how services are offered.
Options include new country parks membership alternative, increasing parking charges at Countryside sites, introducing new on-street parking charges in new locations and reviewing charges at existing locations, introducing new charges for parking at off-street and countryside locations, increasing ceremony fees, expanding moving traffic monitoring sites or keeping street lights off at night on some non-residential roads among others.
Changes could also include pausing the “Operation Resilience” programme, which involves dealing with potholes, replacing road markings, repairs to signs, and drainage cleansing, meaning that these activities and larger-scale structural maintenance, among others, would only be undertaken on safety grounds, or when major or widespread defects are identified. With this change, the Council estimates to save £7.5 million.
According to the “Budget consultation information pack,” the proposed plans involve raising Council Tax by over 4.99%. It states that for every 1% increase in Council Tax, the County Council would receive an income of £7.8 million. However, it is important to note that a public referendum would be required before implementing this change.
At the full County Council meeting last week the Leader of the Council, Rob Humby, said, “The challenges that we face are the same as other local authorities. High inflation, high demand for social care services, and more than a decade of underfunding from the central government. As a result, council budgets are close to breaking point.
“We have warned ministers that this is an unsustainable situation. This month, the Birmingham City Council issued a Section 114 notice. If reports are to be believed, plenty of other councils will be forced to consider doing the same in the next year or two.
“Hampshire is in a better financial position than most county councils. While our finances are stable until 2025/26, we need a central government to fundamentally change the way local services are funded or reduce what councils are legally required to deliver.”
Last week Lib Dem Councillor Adrian Collect said: “The direction of travel that the County Council has been forced through not just during the thirteen years of austerity and the £640 million by which our budgets have already been reduced, it’s a very worrying direction that we’re going.
“They aren’t easy options for making the savings that are required of us, the £132 million that has been identified over the next two years plus we still have £71 million of previous savings that have got to be delivered, £200 million more to come out of our budget.
He added, “I hate the direction of travel, but I really think that the most important thing is lobbying the government to come up with the solution for the local government before it’s too late, because it’s already too late and it’s going to get worse over the next couple of years.”
Hampshire County Council Deputy Leader Councillor Roz Chadd said, “None of us come into this role to make these decisions. They are not nice decisions […], but we are facing a £132 million budget gap in 2025/26, and we do need to do something, be proactive and working through that in a managed way.
“We will continue to lobby central government and highlight the concerts of local authorities going forward. In recent weeks, we have seen a few other councils having to declare financial difficulties, and I’m thankful we are not in that position because we have that forward financial planning.”
Based on the public consultation held during the summer in which HCC received 2,935 responses, 60% of respondents agreed with the County Council’s financial strategy, compared to 45% in 2021.
An important majority also agreed that changes to council services and structures should be considered to help balance the budget. Notably, 54% of responders supported increasing existing service charges, and 47% agreed to introduce new charges for currently free services.
However, 63% of the 2,935 respondents opposed the idea of reducing services.
Hampshire County Council has identified that a total of £90.4 million could be generated through the proposals, of which £75 million is expected to be delivered by 2025/26, leaving an unmet budget gap of £57 million in 2025/26.
Savings proposals by services:
Hampshire Children’s Social Care
Current service budget: £241.9 million
Estimated savings target: £1.5 million
Current service budget: £9.9 million
Estimated savings target: £0.5 million
Current service budget: £209.8 million
Estimated savings target: £28.7 million
Current service budget: £227.5 million
Estimated savings target: £14.1 million
Adult Social Care Headquarters Functions
Current service budget: £22.0 million
Estimated savings target: £5.0 million
Centrally administered grant funding
Current budget: £3.9 million
Estimated savings target: £1.9 million
Highways Service – Planned, Routine, and Reactive Maintenance
Current service budget: £27.1 million revenue budget, plus £10 million transferred to capital works annually for Operation Resilience
Estimated savings target: £7.5 million
Highways – Winter service provision
Current service budget: £6.5 million
Estimated savings target: £1 million
Current service budget: £10.55 million
Estimated savings target: up to £1 million
School Crossing Patrols
Current service budget: £1.1 million
Estimated savings target: £1.1 million
Current service budget: £2.7 million (local bus subsidies and Community Transport)
Estimated savings target: £1.7 million
Waste services – Household Waste Recycling Centres
Current service budget: £2.2 million (excludes disposal costs)
Estimated savings target: £1.2 million
The final decision will be taken at the full County Council on November 9.