Hastings council leaders say the authority is on course to run out of reserves, unless the government takes action to address homelessness costs.
The warning came on Monday (February 3) as Hastings Borough Council’s cabinet endorsed budget proposals for 2025/26, which are due to go to a full council vote next week.
These proposed budget include a 2.99 per cent council tax increase, pre-agreed savings of £417,000 and plans to draw £845,000 from the authority’s general reserves.
The reserves would be used to address a deficit in the council’s spending. Council leader Julia Hilton (Green) linked this deficit to the authority’s long-standing homelessness pressures, which are on track to result in a £903,000 overspend in the current financial year.
Cllr Hilton said: “Forty per cent of our net revenue budget is being spent on temporary accommodation. So even though our housing team have put in place … all the recommended measures to try to prevent homelessness, the pressure is unrelenting.
“The extra funding for homelessness prevention is welcome [but] it is simply not enough to tackle the huge scale of the problem. Without a clear strategy from government to tackle homelessness, the brutal fact is that we will run out of reserves in two years’ time.”
With the £845,000 draw, the authority’s general reserves are forecast to fall to £4.5m by the end of 2025/26 (from an expected figure of £5.4m at the end of the current financial year).
The council’s recommended minimum level of general reserve balance is £4m.
Beyond next year, the council is also currently forecasting a £2.8 million deficit in 2026/27. While this forecast deficit comes with a lot of unknown factors (such as the final level of government grant funding), it could result in the council’s general reserves reducing to £1.8 million — a figure well below the recommended minimum.
The full and final draw from reserves next year could also come to a different figure. This is partly because the £845,000 draw is based on the council achieving 100 per cent of its planned savings.
In previous years, the council has (on average) only achieved around 80 per cent of its savings targets. This figure is on track to be significantly worse in the current financial year (2024/25), however, with the council likely only to achieve around 52 per cent of the target.
Council papers attribute these unachieved savings targets in the current year to “a slower than expected reduction in the number of households in privately procured temporary accommodation” and changes at political and senior officer level.
As things stand, the unachieved savings are expected to result in a further £556,392 being drawn from general reserves by year-end. This comes on top of a £796,298 draw already included in the original budget, bringing the total expected draw from general reserves in 2024/25 to a little over £1.35 million. If these figures prove to be accurate, the council’s general reserve balances would come to the £5.4m figure mentioned above.
A similar situation may occur if the council does not achieve all of its 2025/26 savings, which revolves around sharing service costs with partners.
On the other hand, the council could also find itself in a position where it draws less from reserves than it is currently planning. For example, officers told cabinet members the authority’s programme of acquiring properties to use as temporary accommodation could result in future savings delivered earlier, potentially before the end of the next financial year.
There is also a possibility that the council will receive more grant funding from the government than is currently expected.
Meeting papers also spoke of the council ‘proactively’ using earmarked reserves — i.e. funds set aside for specific projects — to reduce demand on the general reserve balance.
The cabinet-backed budget proposals also include a 2.99 per cent increase in the authority’s council tax demand. This increase would translate into an extra £8.93 for a Band D household, with the borough council’s share of the bill increasing from £298.76 to £307.69 in the 2025/26 financial year.
The full increase to bills will almost certainly be larger as other charging authorities — including East Sussex County Council — are also expected to increase their portions of council tax.
