Havering Council is set to make cuts totalling £12million to plug a huge gap in its finances.
The cost-cutting measures include new and increased parking charges, scrapping early-payment discounts for parking fines, closing Romford Market on Sundays and cutting council-funded police officers.
In an update published on November 2, the council revealed £12million in “savings” and cuts it is planning from April 2024 in a bid to balance a £31m budget shortfall.
Changes to parking will include pay and display increases of 40 per cent, charges at all parks, charges on Sundays for the first time, expanded residential parking zones, and 12-16 per cent increases to existing parking permit prices.
Other cuts are likely to include closing one or more libraries, seeking “alternative” funding for five Metropolitan Police officers paid by the council, and closing Romford Market on Sundays.
The council’s budget update report, due to be formally approved by cabinet on 8th November, says it is “very aware” of the impact cuts could have and pledges to do “everything it can” to maintain high-quality services.
It argues that the council has “acted robustly” to manage the financial crisis, which it blames on “years of underfunding from central government”.
Last month, the council’s newly-appointed finance chief Kathy Freeman warned that the council could be forced to effectively declare bankruptcy within “six to twelve” months.
The council argues it is “well-run”, with low running costs compared to neighbours, but faces the large and growing expense of residents’ social care needs.
It says the government’s formula for funding councils is “ten years out of date and not fit for purpose”.
When approached for comment, a spokesperson for the Department for Levelling Up, Housing and Communities said Havering’s spending power increased by 9.2 per cent last year.
The spokesperson did not respond when asked about the government’s failure to update its funding formula but said the department is ready to “speak to” any council that is concerned about its finances.
In total, the council’s income will be about £218m this year, about two-thirds of which comes from council tax and the remainder from government grants.
Havering argues this is not enough due to “sharply” increasing costs of caring for vulnerable older and younger residents.
The council is also helping growing numbers of residents who are at risk of homelessness, but due to the lack of privately rented housing many are being placed in more expensive bed and breakfast accommodation.
The £31m financial shortfall next year will only partly be balanced by £12m in cuts and £7m raised through a five percent increase in council tax.
There is still a “significant gap” of £12m, but at this stage Havering’s cabinet has rejected about £4.5m in cuts such as halving its contact centre staff team, closing most libraries and stopping 30 minutes free parking.
The council’s reserves – now at about £48m – are “very low” and have been diminishing year on year.
About £10m in cuts have also already been planned this financial year, alongside £6m in planned cuts from previous years that have been “carried forward” because the savings have not been realised.
If the council is unable to balance its budget, its strategic director of resources Kathy Freeman is legally required to issue a Section 114 notice, meaning the council would be effectively bankrupt.
This could result in the government commissioners taking over and cutting most non-essential spending, selling the council’s assets or raising council tax by more than five percent.
In a bid to avoid this, the council will also ask the government for permission to issue a “capitalisation directive”, which would involve taking an expensive long-term loan from the government.
However, it says this would not solve the “underlying budget issue” caused by government underfunding, so it is “very likely” that it would need to take out more loans in the future.
Havering Council is not alone in facing a budget crisis, London Councils has warned of a £400m budget overspend this year due to a “perfect storm” of inflation, growing demand for services and “insufficient” government funding.
One in 50 London residents are estimated to be homeless and living in temporary accommodation provided by their council.
Cllr Claire Holland, acting chair of London Councils, said: “Borough finances are on a knife edge – with grim implications for the future of local services in the capital.”
To read the budget update, visit the council’s website: https://democracy.havering.gov.uk/ieListDocuments.aspx?CId=153&MId=7676
Havering’s Conservative group leader Keith Prince had not responded to requests for comment at the time of publication. However, Conservative councillor for St Edwards ward, which includes part of Romford town centre David Taylor suggested the cuts are a “slap in the face” to the area.
He added: “Romford is a historic market town, the economic centre of the Borough. We also have the largest concentration of crime in the area.
“Cutting back our market, hiking parking charges, and removing the policing team will have a greater impact on our town than anywhere else”.
“It is clear that Labour and the so-called resident’s associations view Romford as a town to be milked
“The council are in a tough position, cuts are the result of a difficult financial situation, both nationally and locally.
“Inflation has driven up the cost of providing services and government funding hasn’t matched this.
“This is why I’ve been to parliament and called on the government to increase housing benefits, to reduce the burden on Havering Council and why I will continue to call on the government to increase the funding.
“But, whilst some cuts are needed, where these cuts fall is a choice.
“Destroying Romford market by hiking pitch fees and closing it on a Sunday is not the right choice”.