Medway Council’s new administration has set out its first annual budget, with proposals to address the forecast funding pressures in 2024/25.
The unitary authority, responsible for delivering more than 140 services to its 280,000 residents, has been transparent about its very challenging financial position since the new administration took office.
Medway’s significant budget pressures for next financial year have been caused by a number of factors including inflation and increased demand on services such as social care and temporary accommodation. The pressures are also due to cuts in funding, such as the revenue support grant which has reduced from £85million to around £7million since 2010.
Last summer the council announced it was anticipating a budget gap of £17.267million for the current financial year, which was reduced by £5.016million to £12.251million by the second round of revenue budget monitoring. Measures have been proposed to address the forecast overspend, including using unspent earmarked reserves and remaining general reserves.
Taking steps to tackle the budget deficit
The new administration has consistently given its commitment to take all steps necessary to address the budget pressures and to avoid the need for a S114 notice, resulting in Government intervention. As part of this work, the council commissioned independent financial specialists, the Chartered Institute of Public Finance and Accountancy (CIPFA), to carry out a review of the council’s financial position in a bid to identify opportunities to reduce costs, increase income and improve service delivery.
CIPFA’s report concluded that ‘Medway is in a grave situation in relation to its financial sustainability’, however, it did not identify any governance or financial failures. The report stated that Medway Council’s room for manoeuvre is severely limited and it would not be possible to set out a balanced budget next year without some form of government intervention/support.
Based on this recommendation, the council wrote to the Department for Levelling Up, Housing and Communities to request Exceptional Financial Support including the flexibility to increase council tax above the referendum limit. Medway Council’s request for council tax flexibility has not been granted.
Leader of Medway Council, Cllr Vince Maple, said: “We have had to take some incredibly difficult decisions now to ensure we can deliver the services that we know local people need and value, and have tried to minimise the impact where possible - particularly for our most vulnerable residents.
“If the government had granted us permission for council tax flexibility, we could have achieved financial sustainability more quickly. If the council is also not granted permission to extend its borrowing arrangements, the outcome would be that our chief operating officer may need to consider issuing a Section 114 notice in the next few months to be able to keep key services running. This is an outcome that we want to avoid as it would inevitably involve the withdrawal of services many people in Medway need and value.”
Request to central government to increase its borrowing
Medway Council awaits a decision from Government for permission to extend its borrowings and fund its remaining shortfall and investment programme. This is through a ‘capitalisation direction’ of up to £14.6milion in 2024/25, and a further £16.2million in 2025/26.
Cllr Maple added: “Medway is not alone in its financial position, with the Local Government Association reporting that one in five councils could be in severe financial hardship in two years. It is absolutely critical that we act now to bring the council back into long-term financial health.
“If the Government supports our request for borrowing and if this important decision is agreed through the Cabinet and Full Council processes, as well as putting in place the improvement plan outlined by CIPFA, it will help us head in the right direction towards becoming financially sustainable.”
Changes to council fees and services
Medway Council has also had to take difficult decisions to make changes to some of its services, all of which will go to Cabinet on Tuesday, 13 February and if approved, will be taken to Full Council on Thursday, 29 February. Details of some of the changes below:
To bring Medway’s parking charges more in line with neighbouring areas, it is proposed to increase the hourly pay and display fee by 60p. The income will help maintain car parks and bays.
Like at country parks across Kent, Medway is proposing to start charging for parking at its own country parks. Frequent visitors would be able to buy an annual season ticket for £60 or pay a flat parking fee of £2.50. Blue Badge holders would not be charged. The funding brought in from parking fees at country parks could be reinvested back into Medway’s parks and green spaces, whilst also providing a valuable new income stream to help address budget challenges.
It is also proposed to stop Medway’s free swimming programme for over 60s and under 16s from 31 March 2024. The additional income this could generate would help with the council’s commitment to retain and maintain its own swimming facilities. However, children and adults will continue to be able to access other free activities to stay healthy and active through the A Better Medway programme.
Speaking about the changes to services, Cllr Maple said: “Last autumn I expressed that some difficult decisions would be needed. Increasing and introducing parking charges as well as ending our free swimming scheme are some of those unfortunate changes we are proposing due to the continued financial pressures we face.
“All of the proposed changes have been set out in the Cabinet budget papers and have the goal of helping the council become financially sustainable in the long-term. It is hoped that by making these tough decisions now, Medway Council will become more financially stable and will continue to provide the high-quality services that matter most to our residents.”