We face the prospect of a £4.6 million budget gap within the next two years, unless measures are taken before then to address the shortfall.
The budget gap is a result of many factors. The impact of the pandemic, uncertainty over funding of local government, coupled with the current national fiscal and economic conditions. This is against increasing costs of delivering services and the homelessness crisis.
in February 2020, full council was presented with a budget with a Medium Term Financial Plan. That was balanced for 10 years to 2028/29 with expected income matching expected expenditure over that period.
That forecast was updated in February, to show the impact of the pandemic. As a result the council faced a budget gap of around £3 million in 2026/27. There was developing a programme aimed at bridging that gap.
However, Monday night’s report to Cabinet shows increasing pressures in areas such as homelessness, pressures affecting works and service contracts, energy costs and staff pay. This had seen the budget gap increase to £4.6 million and come forward to the financial year 2024/25.
Cllr John Burden, Leader, said: “Back in 2020 and thanks to some careful and astute planning, we were one of very few local councils in the country to be able to work to a balanced budget over a 10-year period.
“Whilst that proactive approach meant we were able to weather the pandemic better than most, it was made clear earlier this year that the legacy of the pandemic had left us with a £3 million hole in our budget, which we had a plan to counter and time to implement it.
“However, rising fuel costs and inflation have a huge impact on us just as they do for each and every household in the borough, and the current volatile state of the national economy means that budget gap is increasing and moving closer in our financial planning.”
He added that the council was accelerating its review of its operations to identify how the increased budget gap could be bridged.
He said: “We cannot hide from the fact there will be some difficult decisions that have to be made over the next few years, but above all we will protect essential services to the public wherever we can.
“Even taking into account the full delivery of the plans we had to cover the £3 million gap following the pandemic, this would still leave us needing to identify a further £1.6 million base budget reductions or identify additional sources of income.
“There are no simple solutions. The Government has increasingly looked to local taxation and less funding from themselves to pay for local government services, and that is no longer enough to cover what we need to deliver.
“Even if we increase council tax next year that would still not be enough to cover the budget gap, and the Government needs to recognise this and help local councils.
“It is also worth mentioning that Gravesham keeps a small part of the Council Tax paid by households, with the vast majority going to Kent County Council, Kent Police and Kent Fire & Rescue Service.
“We will examine what we do and plan with care and consideration and will look at where we can increase our income through investments and other routes, but people need to understand the situation as it stands now and set that against the backdrop of considerable economic uncertainty.”
Cllr Burden added that the economic pressures local residents were facing were only adding to the challenge in providing support where it was needed most, and highlighted support for the homeless as a key concern.
Cllr Jenny Wallace, Cabinet Member for Housing Services, said: “We are facing a national crisis with regards to homelessness and this is sadly reflected here in Gravesham.
“We are seeing worrying numbers of individuals and families approaching us for support and the numbers we are having to find temporary accommodation for are at a troubling level.
“We are currently spending around £142,000 a month on temporary accommodation and if it continues at the same level this would mean that we end up spending a total of just over £1.7 million on temporary accommodation alone in 2022/23.
“We currently receive a grant of £352,000 from Government for homelessness prevention and can add to that with receipts from Housing Benefit recovered of around £302,000.
“That means that this year alone we are looking at a projected overspend on temporary accommodation of £1,050,000. Without any further government funding, reductions in demand or action to reduce costs, this overspend will fall directly on us to meet.
“I am so concerned that there is no certainty on Government funding in future years, nor does there seem to be any immediate sign of demand for the service decreasing.
“This is just one example of the balancing act we have ahead of us: supporting an increasing number of those who need us the most while finding ways to bridge a budget gap.”