Tough decisions on balancing the budget

Jun 9 2017

Hampshire County Council

As part of an established two-year budget planning strategy, in response to ongoing national austerity measures – the County Council is facing its biggest financial challenge yet – with a further budget gap of £140 million to close, by 2019/20.

Hampshire County Council Leader, Councillor Roy Perry said:

The challenge to 2019/20 is one we have been preparing for, for a long time, and so early planning has been taking place to identify some of the steps required. Securing savings early; reinvesting in new, more efficient ways of working; and making prudent use of our reserves to meet gaps in funding - are all measures that residents have told us they support. To-date, this approach has enabled us to reduce our spending by £340 million, since 2008 – when national austerity began.
Consequently, the end of year financial report that will be considered by Cabinet on 19 June, tells a story of prudent financial stewardship during very difficult times.
Our biggest challenge is yet to come, with a forecast gap in our budget of a further £140 million, by April 2020. Our finances remain under immense pressure as demand continues to grow for County Council services – particularly social care for increasing numbers of older and more vulnerable adults, and vulnerable children. The picture is worsened by the fact that central Government revenue support grant funding to Hampshire will cease altogether in 2019/20. As a result, we will have to make some very tough decisions on which we will be seeking residents’ views in the coming weeks, in order to sustain vital public services for the future.
In spite of this prospect, the County Council has continued to ensure that important investment is maintained in the county’s infrastructure. Maintaining and improving roads and highways; matching increasing demand for school places and supporting the local economy are crucial to ensuring the future prosperity of Hampshire.
Careful use of reserves has made it possible to invest in other strategies, such as implementing new technology to deliver more efficient and cost effective services. With less funding and higher demand for some services, particularly social care, reserves have also enabled us to weather the storm and plug budget gaps. Using reserves will continue to play a crucial role going forward – but we recognise that this is not a long term solution. The two main reasons are that the majority of our reserves are already committed to fund essential capital investment; and one-off reserves cannot be used to solve revenue problems - they dry up very quickly. When there isn’t enough income to pay the bills, ongoing service costs still need to be reduced - otherwise funding problems remain and grow for future years.
All of this means that the County Council needs to find more radical ways of making ends meet while ensuring that we protect vital services. As such, we will be proposing potential options to residents in the summer, to seek their views on what we might do over the next two years to balance the budget. Given that our efficiency programme between 2008 and 2019/20 represents total savings of nearly £0.5 billion we need to continue to ensure limited funds are targeted to where they are needed most and fully maximised to benefit Hampshire residents. There is no question this is a big challenge - but we have risen to every such challenge in recent years and we will do so again. We will remain a high performing and low spending County Council serving our residents first and foremost.