Hampshire County Council has warned that it is “close to breaking point” as it faces a budget gap of at least £132m by April 2025.
The authority stated that the budget deficit is due to costs rising “dramatically”, with inflation pushing prices up and demand for services continuing to increase.
Hampshire council added that “years of underfunding from government” had further contributed to the authority’s financial situation, as it has had to reduce spending by more than £640m over the last decade.
Rob Humby, Hampshire County Council’s leader, said: “We’ve always been very proud to maintain strong public finances for the people of Hampshire, and this has seen us through over a decade of national austerity.
“But having already reduced our spending by more than £0.6bn during this period, and facing a £132m budget shortfall by 2025/26, we have now reached the tipping point, with no further financial safety net to fall back on.
“As a result, our budgets are close to breaking point and there simply isn’t enough money to go around – a national problem facing the whole of local government.”
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A report, which is to be presented to the council’s executive lead member for universal services, outlined that Hampshire has identified a total of £90.4m savings across all directorates to help bridge the funding gap. However, this leaves an unmet budget deficit of £57m in 2025/26.
Also, a review of the council’s reserves balance has identified most of the additional funding required to bridge the gap for 2024/25, albeit a small deficit of £2.4m remains. This is in addition to the “significant shortfall” of £57m, the report explained.
Humby added: “Hampshire is in a better financial position than most other county councils, and while our finances are stable until 2025/26, we do need central government to fundamentally change the way that local government services are funded, or reduce what councils are legally required to deliver.
“In the meantime though, we can’t just sit and wait for that to happen. We have to plan on the basis that we’ll have to close the budget gap ourselves, which is why we’re reviewing these savings proposals now.”
The council proposed a series of measures to help balance its books, which included raising council tax by 4.99%, generating extra income, introducing extra income to help sustain services, using the council’s reserves, and reducing or changing services.
“I acknowledge some of the proposals being put forward this autumn will make difficult reading and go well beyond what we have previously had to consider in our savings programmes to date and regrettably, we now have no other choice than to look at changing and reducing services,” Humby continued.
The council’s proposals will be voted on by Hampshire’s Cabinet in October before a final decision is made in November.
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