Funding to be cut faster than expected

The councillor responsible for finance on Malvern Hills District Council has warned difficult decisions will need to be taken after it was revealed the authority’s government funding is set to be reduced faster than expected.

The council had anticipated the Revenue Support Grant – the main fund MHDC receives from the Government to help run day to day services – would be phased out and disappear completely by 2019/20.

But details of the council’s funding settlement from the Government for the next four years – released just before Christmas – has revealed cuts will take place at a faster pace with the council set to lose more than £700,000 over the next three years.

During the next financial year MHDC will receive £778,788 in RSG, some £198,293 less than budgeted for in its Medium Term Financial Plan. The grant itself will more than halve in 2017/18 to £360,572 and then drop by 71 per cent the following year to £103,595 before disappearing completely in 2019/20.

Some of the money lost will be replaced by a new rural services delivery grant which will be worth £56,000 next year, rising to £183,000 a year by 2019/20.

The faster than expected pace of cuts means the council will also have to increase the savings it needs to make in the next few years, with an extra £200,000 needing to be found in 2016/17 and an additional £400,000 over the following two years.

Overall, savings of £1.8million a year will need to be found by 2018/19.

The Government is also consulting on plans to reduce the length of time New Homes Bonus money is paid for – cash given to councils for each new home built and occupied in their area – from the current six years to four years.

If approved, this will result in a reduction of £500,000 a year in NHB funding the council had expected to receive.

But because MHDC has one of the lowest rates of Council Tax in the country, it will be able to increase its portion of the bill by a maximum of £5 on an average Band D bill, equivalent to a 3.6 per cent increase. This will be subject to approval by Council at its budget setting meeting in February.

Cllr Paul Cumming, portfolio holder for finance on Malvern Hills District Council, said: “While the overall amount needing to be saved has remained the same, the speed at which our funding will be reduced will pose us significant challenges in the next two to three years.

“It means some difficult decisions have to be made. However, as I’ve said before, we’re committed to protecting front line services as much as we possibly can. We’ve already demonstrated how we can do that through the sharing of senior management posts and other services.

“Malvern Hills District Council has a good track record when it comes to saving money and we’re developing a robust business plan which will set out exactly where we expect these savings to come from. I’m confident we will meet the financial challenge facing us.”

The council’s Business Plan will be presented to and discussed by the Executive Committee on 26 January.