Hampshire County Council is looking at defining and establishing a legal minimum service level, while exhausting “all options for saving money”.
But doing even this is not expected to achieve the recurring £41.6m of savings needed to balance the authority’s budget in 2025/26.
Instead, the council is aiming to pass the ‘commissioner test’. This, in essence, means that if commissioners were sent in to review Hampshire’s financial position, they should not be able to find any instance of expenditure that was not already at the legal minimum service level.
“With this in mind, the intention would be to consider any added value of having external validation of the work that had been completed as this would form a very important part of our submission to government in advance of the Comprehensive Spending Review, highlighting that the county council is unable to balance its budget with the funding it has and cannot make any more savings to close the financial gap,” wrote Rob Carr, chief finance officer and director of corporate operations, in a report to be discussed in a cabinet meeting tomorrow (12 December).
Issuing a section 114 notice, even if the regulations would require Hampshire to do so, would also be “pointless”, Carr wrote, “since issuing an instruction to county council to address the budget shortfall when we had already exhausted all options for saving money would clearly not achieve anything”.
As reported, the authority’s finances have already passed a “tipping point”, with a budget gap of at least £132m by April 2025. Hampshire expects to deliver a balanced budget both this year and next, using reserves, which will run out in 2025-26.
Carr’s report recognises that there is “no clear definition of what a legal minimum service looks like”. The corporate management team have implemented a piece of work to look more closely at how this can nevertheless be achieved across the authority’s full range of services, with a view to concluding it by Autumn next year.
The work will involve two strands – the first looking at “further options for service change or reductions that could be implemented in order to help close the remaining gap for the 2025/26 budget”. The second looks at options for service reductions “that would only be implemented in the face of a section 114 notice”.
Some of the options in the second strand “do not necessarily make sense” based on past work undertaken at the council, Carr wrote. For example, Hampshire “currently makes an annual contribution each year towards capital spend and towards replacing IT infrastructure and desktop kit, all of which could be stopped. Clearly, longer term this does not make sense as it only stores up financial problems for the future, but in the face of a section 114 notice they are options we would have to consider.”
It is this work that Carr hopes will help the authority meet the ‘commissioner test’ and form an important part of the evidence for subsequent discussions with government.
Looking at capital investment, Carr’s report also proposes that cabinet approves the allocation of capital cash limits to directorates for 2024/25 only “at this stage”. “It is recommended that the amounts for 2025/26 and 2026/27 are held centrally, allowing the county council time to continue to consider the evolving MTFS position,” he wrote.
“This is a pragmatic approach that balances recognition of the importance of capital investment with the need to review and challenge all revenue based expenditure given the exceptional financial environment.”
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