Arun District Council warned it faces running out of money in five years

Members of the council’s policy and finance committee heard on Thursday, October 26, that its £25million in reserves would be completely spent by forecast overspends from the 2023/24 to 2027/28 revenue budgets.

The forecast overspend for the set 2023/24 revenue budget is £4.5million.

The council’s head of finance, Antony Baden, told members the council‘s position was ‘serious’ and ‘tough decisions’ would have to be made to find savings – but ‘good’ reserves had bought the council some time.

He said pay and salary inflation, loss of national government funding, increased auditors’ costs, fixed-high interest contracts and a ‘volatile’ economic climate were contributing to the deficit.

He added saving £4.5million over the 2023/24 budget was not ‘realistically’ achievable, but investments funded through borrowing and other measures, and staying in the West Sussex business rates pool, to improve income for following budgets, could be achievable.

Opposition leader Shaun Gunner (Con, Rustington East) said the business rates pool was not benefiting Arun, as the council had contributed ‘tens of millions of pounds’ in taxes from businesses that were ‘just sitting there’ not being used.

He said: “I think it’s embarrassing for us to be taxing businesses like this and for that money to be sitting their and not being spent for the benefit of this district.

“We only have access to that money if other [leaders] agree to it. So far in the last two years [the pool] has spent zero pounds – that is disgraceful.

He also said the increases in council staff costs, currently set to increase by 6.5 per cent in 2024/25 and costing an extra £1.1million, could be ‘much bigger’ than forecast, as unions had refused recent pay-award offers.

The council’s employment costs, contracts, supplies and services spend was about £25.4million in the 2023/24 budget.

It was noted in the report to the council that any annual rise of inflation higher than the maximum it is able to increase council tax would be a net loss in revenue for the council – currently 6.8 per cent to 2.99 per cent respectively.

Mr Gunner said the ability of members to find savings was a ‘chicken-and-egg’ situation, as with only forecasts and no absolute numbers ‘to be hitting’ members would need a more concrete framework of what needed to be achieved.

Mr Baden said the report was a rough estimate and that without members’ input they would not know where to focus their efforts, adding an updated financial prospects report would come before the policy and finance committee at its meeting on December 6.

He said, ideally, reserves would be refilled once overspends had been resolved.

Leader of the council Matt Stanley (LDem, Marine) said he agreed with ‘many’ points raised by Mr Gunner about the rates pool, adding he would like to see more money come back to the district council to invest in more developments and homes in Arun.

He later said homelessness was a big pressure on the council budget, and investment could reduce permanent and temporary accommodation costs, like fewer bed-and-breakfast rentals. Mr Stanley also said he was in conversation with the county council to access some of the business rates from the pool.