Councils facing budget gap

The County and District councils are both facing budgets gaps as inflation and rising interest rates take their toll on spending plans.

The latest forecast for the County Council budget estimates an overspend of £16.4 million for the current financial year.

As part of the work to bridge the financial gap, Hertfordshire County Council intend to use £10 million from contingency budgets, leaving £6.4 million to be found from a variety of internal cost-saving measures.

Steps have alteady been taken to reduce overspends, including moving services currently at County Hall to the council's Stevenage campus and cutting back on recruitment.

In a statement, the council said: "At a time when Hertfordshire residents and businesses are facing unprecedented challenges of their own, the county council is committed to providing excellent services that continue to be efficient, collaborative across partner organisations and improve residents' lives."

At East Herts District Council, the new Green/LibDem joint administration have revealed that the council’s financial position is extremely vulnerable to further interest rate rises due to the last administration's extensive borrowing.

The Council's Medium Term Financial Plan, published by the previous Conservative-led administration on 1st March 2023, showed that annual savings of just over £6 million were needed by the end of 2026/27 in order to balance revenues and expenditure. Since March, inflation and other costs have continued to rise, while the council has little reserves to fall back on.

Over the last decade the Conservative government has steadily reduced funding to local authorities, with East Herts seeing this income cut by about a third. Worse, the last administration chose to spend on multiple, expensive capital projects (at Grange Paddocks and Northgate End Car Park in Bishop’s Stortford plus Hertford Theatre and Hartham Leisure Centre in Hertford) in the space of a few years, leaving East Herts Council with a legacy of very high borrowing. With repeated interest rate rises, the cost of this debt has grown significantly and continues to increase.

:: East Herts Green Party and Hertford & Stortford Liberal Democrats

Cllr Carl Brittain, new Executive Member for Financial Sustainability, said: "This difficult financial situation has been left to us by the previous Tory administration. By putting so much money into several large capital projects over a short space of time, the council was exposed to the risk that a change in the economy would blow a hole in council finances. The economic downturn has been a factor, but this doesn't change the fact that the previous administration can be seen as having acted recklessly, by spending on multiple expensive projects simultaneously."

The new Leader of East Herts District Council, Cllr Ben Crystall, said: "The Greens and Lib Dems are committed to being open and honest with East Herts residents. Just months in to our Joint Administration, and after reviewing the financial state of the Council, we feel it is right to inform everyone of the difficult situation. We have very tough decisions ahead.

"Rising costs should not have to fall on residents, many of whom are already struggling financially. We will do our best to solve the issues we’ve inherited from the previous Administration but will also be looking to the government to help us cover the increasing costs of essential services across the district."

The new administration has warned changes to services and increases to fees and charges may be required to clear the deficit and produce a balanced budget over the next 4 years.