Medway Council’s new administration has committed to taking the steps needed to put the authority on a “more sustainable financial footing”, leader of the council Vince Maple has said.
But he has called on the government to enter into a ‘new deal’ with local government to increase funding so that councils such as Medway can continue to provide services in the longer term.
As reported in Room151 yesterday (31 July), the financial challenge facing Medway Council was set out in the authority’s first revenue budget monitoring report for 2023/24, which is to be discussed at a cabinet meeting next week (8 August). An overspend of £17.267m has been projected for the 2023/23 financial year, which exceeds the general reserves available by more than £7m.
Maple said that Medway was “not alone” in being in a “precarious” financial situation.
“The new administration has inherited a very difficult situation and we are now taking urgent action to address the position this year and plan for the years ahead. Tough decisions will be needed in the coming months if we are to continue to provide our most critical, statutory services,” Maple said.
“We are not alone and know that many other councils up and down the country are in a very similar precarious position.
“We are committed to taking the steps we need to put the council on a more sustainable footing but longer term as social care costs continue to increase, the viability of many local authority services will increasingly come under threat for local people and we urge the government to enter into a new deal with local government to increase funding for critical care services alongside sufficient funding for other valued services.”
As reported, in the first revenue budget monitoring report for 2023/24, Medway Council’s chief finance officer Katey Durkin recommended “urgent actions” such as the cessation of all non-essential spend, including reviewing spend on non-statutory services; curtailing, reducing or refinancing the council’s capital programme “where it impacts on the revenue budget”; and reviewing and rationalising land and building assets.
In a statement on its finances published today (1 August), Medway Council said that since 2010/11 central government funding to the authority through the Revenue Support Grant had reduced by 91%, from £85.1m to £7.3m in 2023/24.
The statement noted that Medway, “along with many other councils across the country”, had “suffered heavily from the huge impact of the increasing costs of providing critical social care services for the most vulnerable members of our communities, as well as the impacts of soaring inflation, increased construction costs and cost of living pressures”.
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Together, these have created a “perfect storm” resulting in the council’s spending demands increasing at a far faster rate than the funding received from local taxation and central government, the authority said. Medway Council has therefore “had to find savings from spending reductions and income from other sources to balance the books as well as drawing down on reserves”.
The council reported a “significant overspend” on the budget last year, largely on social care services for older people and children, and said there were “similar challenges in this current financial year, with a continuation of the increasing demand for and cost of providing services”.
In the statement, Medway Council noted that with management action, the financial position “generally improves” from the first revenue budget monitoring report and forecast, with other rounds of budget forecasting to take place throughout the financial year.
However, the council acknowledged that the opportunities to reduce spend are “fewer” and the choices to be made “much harder” each year.
The statement concluded: “The council remains completely committed to ensuring that its resources are directed where they are needed the most and urgent steps are now being taken to review all areas of expenditure across the council and bring it back within the budget forecast or within the amount that could be funded from reserves.”
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