Hastings Borough Council could be bankrupt by March 2024

Hastings Borough Council is facing soaring costs due to the number of homeless people being housed in temporary accommodation more than doubling in the space of a year.

It is having to use its dwindling reserve fund and is even considering selling four pieces of land to raise £3 million pounds to tackle its “homelessness problem”.

A report from the Local Government Authority has now said that “unless urgent action” is taken, all of the council’s general fund reserve will be used by March next year.

As of March this year, the council had £4.8 million in its reserve, £1.2 million below its agreed minimum of £6 million.

The council has seen its number of people in temporary accommodation more than double (Image: Hastings Borough Council)

The council's budget said it should have £2.3 million in the bank by March next year but officials are concerned that this does not take into account overspends, interest payments on borrowing and inflation. It also relies on the plan to reduce the amount spent on homelessness by £1 million.

The report stated: “Therefore, unless urgent action is taken by the council, it is likely the organisation will have utilised all of the general fund reserve by March 2024.

“Although the council holds a number of earmarked reserves, these are either unusable or of insufficient value to be considered as a funding solution.

“This is a very concerning situation that needs to be addressed urgently.”

The council has set out its response to the recommendations in the report and work has already started on these.

This includes looking to sell land, recruiting more housing staff and ensuring that all staff and councillors are focused on the financial situation.

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Other local authorities have faced bankruptcy including Woking Council, Thurrock, Croydon and Slough.

Crawley Borough Council also raised concerns about bankruptcy in January this year.

Cllr Paul Barnett, leader of Hastings council, said: "When I became council leader in 2022 I immediately ramped up our work to respond to both national and local financial pressures. This led directly to us setting a much tougher budget in February as the cost of tackling homelessness had substantially increased by then.

"So I want to thank the LGA for coming and doing this review in March and for their recommendations, all of which we are taking on board. We have listed nearly 100 actions already taken or planned in response in this report and I welcome all partners across the town who wish to work with us to resolve this crisis that is impacting so many residents.

Council leader Paul Barnett has described the system as 'broken' (Image: Supplied)

"The financial difficulties that we are facing are a result of a national housing crisis. The system is broken and as a result is forcing many of our residents out of secure accommodation into temporary housing provided by the council.

"Our housing register has more than 1,500 households waiting for a new home and there are more than 500 households (more than 1,000 people) living in emergency temporary accommodation.

"The ever-increasing costs of temporary accommodation means that to provide housing for everyone we have a duty to house has increased from £730,000 in 2019 to £4.5 million for 2022/23 - a rise of more than 400 per cent - and it is predicted to rise to £5.6 million for 2023/24.  And yet without the cost of temporary accommodation and housing, the council's budget for 2022/23 shows an underspend of £1 million.

"Because of the huge increases in housing costs, there are going to be difficult decisions that have to be made across the whole council as we continue to try to balance our budget."

The council’s cabinet is meeting tonight to discuss the LGA report.