Herts County Council faces prospect of £21m black hole in budget
The scale of the financial challenges facing Hertfordshire County Council (HCC) has been hammered home after a forecast overspend of almost £21m.
The latest available data shows that just three months into the 2024-25 financial year, the authority had spent £4.6m more than had been expected. As a result, it is predicted that over 12 months the council could overspend by as much as £20.9m.
Council officers have started to look for £14m of new savings – in addition to the £46m of savings already planned for 2024-25.
On Monday (Oct 14), the cabinet discussed the challenges. Increasing costs of materials, high energy prices and increased demand for council services all affected the bottom line. The biggest financial pressures related to provision for looked-after children and supported living services.
At the meeting, Hertford’s Cllr Bob Deering, executive member for resources and performance, highlighted the ongoing challenges facing councils. He also pointed to savings already made by HCC, future economies from organisational resourcing and the previous decision to double the council’s contingency.
Cllr Deering, who is also leader of the Conservative group on East Herts Council, told the cabinet the county was already on track to achieve £43m of the £46m planned savings this year. He said officers were now working “extremely hard” to find additional savings for this year.
According to a report published in advance of the meeting, council departments forecasting overspends are being asked to identify actions to mitigate the pressures in a bid to cut spending by £6.6m. Where they cannot, they will be asked to take other actions to “offset pressures”.
Meanwhile, all departments are being asked to reduce “non-pay” costs to save a further £5.4m – which is equivalent to a 30% spend reduction in areas such as printing, consultancy, mileage and training.
Cllr Deering acknowledged that he was unsure whether the council would find an additional £14m of savings. However, he pointed to the council’s previous decision to double the amount of contingency in the budget this year to £20m.
He said he was “optimistic” they would find some additional savings and that any overspend would end up under the £20m contingency.
Meanwhile, it was also reported that the ongoing restructuring of the council will ultimately save £16m a year. With the review not set to be complete until January 1, savings achieved this year are expected to be around £6m.
Pointing to social care, leader of the council Cllr Richard Roberts said that it was not lost on anybody that even with a budget in excess of £1.1bn, the council was struggling to meet demand.
He noted a letter he sent last week to Hertfordshire’s 12 MPs – including Labour’s Josh Dean in Hertford and Stortford – highlighting the need for financial and policy reform concerning SEND (special educational needs and disabilities) provision.
According to the report to the cabinet, the overall schools budget is heading for an overspend of £2.3m in 2024-25 – driven by a £4m overspend in the high needs block used to support SEND children.
Cllr Roberts said: “We have held that finance position – without overspending – until this year. Potentially we may overspend really, really significantly from here on in.
“The cost of borrowing around that is something that is almost unsustainable for this council and across the country.
“And that is one of the key asks for our MPs to address that issue – whether it is funding or reform – because it is unsustainable in so many councils.”