The new Labour administration at Hull Council is heading for more than a £6m overspend in its first year in power, according to a new report.
The latest forecasts say that the authority could be overspent by £6.68m by the end of the financial year.
A report to a meeting today says the position is “challenging” and is receiving “priority attention” from officers.
The council’s property section is suffering because of the grim economic climate and is over £1m under its forecast budget due to a drop in rental income.
Visits to museums, leisure centres and the Ferens art gallery are slightly up, but income is down, leading to a forecast overspend of £640,000. There’s also been a huge fall in the number of people going to council-run Hull New Theatre and City Hall, with figures down from 72,393 to 48,327 compared to the same period last year.
The number of children in the care system has also increased from 601 last December to 640 in June putting extra pressure on its budget, which is forecast to be nearly £2.2m overspent.
Another £3m was to have been saved by cutting back on overtime and introducing a 35-hour working week for council staff, as well as slashing senior officer pay, which hasn’t yet transpired. Attempts to cut mileage allowances from 65p a mile, as part of changes to terms and conditions, which could save £1.3m, are still being negotiated with unions.
Labour’s portfolio holder for finance Coun Phil Webster says in the report that they remain confident of balancing the books, using underspends in some areas to even out overspends.
He said: “Whilst we are pleased to see a sizeable reduction in the overspend position in period four, compared to the initial review undertaken at period three, there is clearly a need to clamp down on spending in those areas exceeding budgetary position.
“The administration’s view is that overspends that are unavoidable in some directorate areas should be consumed with underspends in other directorate areas. We are confident that the council remains on target to balance its budget.”
Coun Webster said yesterday they’d set aside £6.5m from their original budget as a contingency: “If we can hold onto that £6.5m, then we have already closed the gap on the Medium Term Financial Plan. If we have to spend it we have to spend it and look at what’s down the line in forthcoming years.
“It’s not a case of robbing Peter robbing to pay Paul, it is keeping money in abeyance if there’s any problems. As it stands we have a balanced budget.”
However Liberal Democrat deputy leader Coun Mike Ross said Labour was taking a similar approach to their finances as the former Labour Government did under Gordon Brown “spending money now that we don’t have and piling up problems for the future.”
He said: “What we really need is proper management of the council’s finances, not more creative accounting from the Labour Cabinet.
“Steve Brady (the Labour leader of the council) gave a commitment to bridge the gap without cutting council services, which we think frankly is quite a big claim. We will hold them to that promise.”
Coun Ross said the influence the trade unions - which had strongly backed Labour’s election campaign - was showing. He said the £6.5m contingency was the first they’d heard of it. “This is news to us,” he said. “We will believe it when we see it.”
Research by the Taxpayers Alliance earlier this year found that Hull paid the highest rates of 65p per mile, along with Leeds and Bradford, for staff using their own cars for work. Andrew Allison, from the Taxpayers Alliance, said: “All staff should be paid 45p a mile which is now the standard HM Revenue & Customs rate. The unions seem to be extremely loath to get rid of this particular perk.”
The average rate across the UK last year was 56.4p meaning that a typical council worker would have ended up £164 better off for every 1,000 miles driven.