Folkestone & Hythe Council Budget: Council Tax Rise, Reserves Drawdown and Debt Repayment Shake-Up

Folkestone & Hythe District Council’s budget debate yesterday evening didn’t hinge on a big, obvious “cuts list”. It hinged on something far less headline-friendly: how the council is choosing to fund itself, how fast it provides for repayment of borrowing, and how much of today’s stability is being bought through technical policy choices most residents will never hear explained.

We The Shepway Vox Team have already warned that the most consequential decisions in this budget sit in the machinery underneath: planned use of reserves, assumed income, and a major switch in Minimum Revenue Provision (MRP). Yesterday’s Full Council debate put voices and politics around that machinery, and then forced everyone to show their hand in a recorded vote.

The result: the budget passed, with 16 councillors voting For, 5 Against, and 7 Abstentions. Put simply: your council tax has risen again.

A five-minute speech, and a 163-page reality for item 12

Cllr Tim Prater (Lib Dem – pictured) proposed what is, in practice, a bundled decision: the revenue budget; capital strategy and programme; reserves and balances; treasury and investment strategy; medium-term financial strategy; and the council tax requirement. He pointed councillors to “pages 27 to 190” of the pack, then joked he had five minutes to cover it.

His core pitch was clear. This was, he said, the third budget of this administration: “properly balanced” and “not funded from general reserves”, with a “sub-3%” council tax increase. He contrasted that with the previous administration’s final budget (which he said used general reserves), and with Kent County Council’s budget (which he also said used general reserves). He also stressed that the district council’s portion is “only around 13%” of what residents pay, with the rest going to KCC, police, fire, town/parish councils and special expenses.

Then came the technical line that actually drives the shape of the budget: Recommendation Three, approving a change to MRP calculations.

Prater called it “really dull to everyone except Connor and myself”, but he said it was “fundamental and crucial”, and that without the finance team’s work “this would be a very different position and a very different budget.”

MRP, explained the way residents actually need it explained

A simple way to understand the MRP is this: it is the amount a council has to set aside from its day-to-day budget to repay the money it has borrowed.

That day-to-day budget is largely funded from council tax (alongside business rates and grants). So if the MRP charge rises, it squeezes the money available for services. In plain English: a bigger MRP line means less room for frontline delivery, unless the council raises more income or finds savings elsewhere.

This is why MRP has become such a live issue since 2019/20 in local government generally. Where MRP rises, the space for services shrinks. And that pressure has been made worse by the last few years’ economic reality: inflation has eroded the value of the public pound, and interest rate rises have pushed up costs across the system. Inflation makes staffing, contracts and maintenance more expensive. Higher interest rates increase the cash cost of borrowing and can make capital plans harder to carry. Together, those forces can make the MRP line feel heavier and more politically painful, because councils are trying to fund more expensive services at the same time as financing costs tighten.

That context matters because FHDC’s 2026/27 budget does something very specific with MRP: it changes how the calculation is done in a way that (as councillors acknowledged in the chamber) creates roughly £2 million of headroom for the budget. In other words, the council has used a change in repayment policy to reduce the annual charge now, freeing up revenue capacity in the short term.

And this is the crucial honesty test for any council doing this: changing the MRP policy can make the revenue budget look healthier now, but it also changes the timing of who pays and when. It does not make borrowing vanish; it reshapes the burden.

Cllr Jenny Hollingsbee said the quiet part out loud: “No wonder we haven’t used any general reserves”

Cllr Jennifer Hollingsbee (Con) praised officers, confirmed the budget is “balanced” without general reserves, and then immediately challenged the framing. Yes, she said, but there is “quite a lot of earmarked reserves within that budget”, and using them reduces those reserves. She noted the report calls reserves “adequate”, not “excessive”, and warned that “adequate is fine, but they are just adequate.”

Then she put a figure on what MRP is doing to this budget. She said the new approach can be used for 2025/26, and for 2026/27 it “produces 2 million pounds… to be used in the budget.” Put that alongside earmarked reserves, she argued, and the politics of the “no general reserves” claim becomes clearer: “No wonder we haven’t used any general reserves. We didn’t need to.”

She also used her time to resurrect Princes Parade and question the £6 million proposed for Hythe pool, and she criticised the ongoing costs of Otterpool properties (council tax on empty/unlettable homes). Her bottom line was blunt: she could not support the budget.

Godfrey: balanced budgets are compulsory — the question is how you do it

Cllr David Godfrey (Con – pictured) made the point many councillors avoid because it punctures theatre: councils always have to balance their budgets, and there are several ways to do it. Raise council tax. Use reserves. Reprofile spending (delay projects). Borrow.

His concern was that reserves built up in earlier years are now being used and the capital programme is heavily reliant on borrowing. He also worried about reliance on future asset disposals and capital receipts (including Otterpool Park) that keep slipping. His bottom line: he could not support the budget.

Lockwood: if we know we’re ending, why hoard “adequate” reserves?

Cllr Adrian Lockwood (Lab) went in a different direction: if this is effectively the council’s last full-year budget before reorganisation, why carry “adequate” reserves into the endpoint? Why not spend more now “for the good of the people of Folkestone and Hythe” rather than preserving capacity for an authority that may be about to disappear?

It is a provocative argument, and it forces a real strategic question: is this budget designed to be prudent for a continuing institution, or purposeful in a closing window?

Scoffham: principle politics — homelessness funding and ethical investing

Cllr Stephen Scoffham (Green) supported the budget and called it “principled”. He highlighted the £5 million capital investment in new council-owned temporary accommodation for homelessness, and he praised the ESG elements of the council’s investment policy in the treasury strategy as a statement of values about how public money is invested.

Alan Martin: support the MRP change, but explain the “technical accounting thing” properly

Cllr Alan Martin (Con) supported the MRP changes and said they make sense ahead of local government reorganisation, but he warned the council must communicate far better. The budget, he said, balances “largely due to technical adjustments”, and the MRP change is complex with a “huge impact”. Residents won’t understand what is happening unless the council explains it clearly, and he asked for greater transparency on why the change was made and how it reshapes the budget.

He also argued the council should better understand neighbouring councils’ practices and financial positions, because in any future merged authority, everything is thrown into a single pot and decisions taken now can determine whether residents gain or lose later.

On leisure, he attacked what he saw as the absence of a true strategy, describing the plans as a forced “repair bill” after years of inaction. On that basis, he could not support the budget.

The leisure flashpoints: Folkestone pool grant, Hythe pool spend, and who controls the outcome

If MRP was the engine room, leisure was the emotional battleground.

Supporters framed the Folkestone Sports Centre pool grant (around £2.4m/£2.5m in the debate) and the £6m for Hythe pool as last-chance investment before decisions are taken outside the district after reorganisation.

But critics raised three big concerns.

First, control and ownership. Cllr Nicola Keen (Lab) argued the council should have acted earlier, used money before administration, and taken the asset into public ownership rather than paying millions now to support an organisation the council does not control. Cllr Jackie Meade echoed that point: she wants a Folkestone pool, but questioned giving “over two million pounds” without clear certainty on pricing for local people and schools, and without confidence the successor authority won’t face new financial demands later.

Second, perceived fairness. Cllr Tony Cooper said residents on the Marsh feel there is “nothing in this budget for them” and urged greater visible investment and service presence there. Cllr Keen, from the other direction, made it clear “Hythe gets it all” while Folkestone gets little. Whether those perceptions are fully fair is arguable; the political fact is they exist and they drive trust.

Third, value for money under uncertainty. Several councillors questioned whether the Hythe pool scheme is the right approach and whether this is strategic planning or crisis spending.

Climate change, Southern Water, and the “you won’t be able to use your toilet” moment

Some of the most arresting moments were about risk, not percentages.

Cllr Tony Hills (Con) spoke about storm resilience and preparedness. Then Leader of the Council, Cllr Jim Martin (Green – pictured)  described Southern Water’s tankering operation to avoid Nailbourne overflow, warning that if overflow occurs at Newington and Paddlesworth it can stop sewers functioning across a wide area — and translated climate impact into something residents immediately understand: “You won’t be able to use your toilet.”

Budgets are not just about what councils choose to fund; they’re about what they’re forced to respond to. Climate and infrastructure risk is increasingly becoming a cost line — and a service-continuity risk line.

Prater’s closing: earmarked reserves are meant to be spent, and we must act before someone else decides

In his closing, Prater defended using earmarked reserves (“that’s the point of earmarked reserves”), defended the leisure investments as necessary before reorganisation, and returned again to Princes Parade, saying the scheme was effectively dead before this administration took office and they merely “buried it”.

He framed the Hythe pool refurbishment as a bargain compared with the abandoned Princes Parade scheme, which he said had risen to £45 million before becoming unviable. He closed with a blunt dare: vote against this budget and you are voting for no Folkestone pool reopening and the continued decline of Hythe pool.

The vote: names, numbers, and a divided chamber

Because setting council tax triggers a recorded vote, the final outcome is clear in a way budgets often aren’t. The budget passed: 16 For, 5 Against, 7 Abstentions.

What residents should take from this

This debate exposed the real dividing lines.

Supporters see a council using a closing window before reorganisation to invest in facilities and homelessness provision while keeping council tax at 2.99% and avoiding using general reserves.

Opponents and abstainers see a budget held together by technical recalibration (MRP), reserve drawdowns and borrowing, with big spending bets where control, affordability and long-term value are contested.

And that takes us back to MRP. If the budget’s biggest balancing move is a technical change most residents will never hear explained, “balanced budget” becomes a slogan, not an explanation.

If the council wants public trust in what may be its penultimate full-year budget, it should publish a resident-facing, plain-English explanation of MRP and the policy switch: what it changes, what it saves now, what it implies later, and how it interacts with interest costs and borrowing. Not buried in appendices. Put it where residents can see it.

Because people can live with hard choices. What they cannot live with is being told a budget is “balanced” without being shown how.

The Shepway Vox Team

The Velvet Voices of Voxatiousness