Havering councillors have approved a budget for next year despite uncertainty over the local authority’s future financial stability.
During a five-hour debate councillors agreed to raise council tax and rents while planning cuts to 400 staff roles over the next two years.
The council faces budgetary pressures on multiple fronts, with ballooning costs of social care for its elderly population, a loss of income during the pandemic, inflation and limited cash reserves.
By 2026 the council will need to cut its budget by £26million and is currently trying to close a gap of £4m by the end of March.
To deal with those pressures members agreed that core council tax should rise by the maximum of 1.99 per cent and that the additional adult social care precept should increase by 1 per cent. Added to an 8.8 per cent rise in the Greater London Authority’s share of council tax, it means Havering households living in average band D properties will pay £77.67 more during the 2022/23 financial year.
Councillors also agreed to raise council rents by 4.1 per cent, bringing the average weekly rent to £104.88.
Council leader Damian White said: “No-one wants to pay more council tax, whether National Insurance, VAT or other taxation, but the money we’re getting is going to support the fifth most efficient council in the country.”
He added that residents in band A to D properties will receive a £150 rebate from the government, which will offset the extra cost this year.
The council’s core spending power next year is expected to total £198m, just over two thirds of which will be from council tax and the rest from government grants.
Except for a proposed cut to allowances for senior councillors that will save £77,000, no alternatives were proposed by opposition groups, and the budget was approved by a vote of 28-8, with 13 abstentions.
Cabinet member for finance Roger Ramsey said he had always tried to keep council tax as low as possible but this year the “extremely high” cost of caring for elderly people discharged from hospital means “we don’t have the option”.
He added that he hopes the government’s promised fair funding review and ‘levelling up’ plan will recognise the pressures on Havering’s elderly population, which is 5 per cent higher than London’s average of 12.2 per cent.
According to figures released by the council previously, at £133 per person per year, Havering receives the fourth-lowest level of government funding in London, less than half the amount neighbouring Barking and Dagenham receives.
Ray Morgon, leader of the Residents’ Group, said the government forcing council tax rises by taking away £70m in annual funding since 2010 was a “stealth tax” on residents.
Commenting on the proposed cuts to 400 staff jobs, he said the plans were still “a bit finger in the air”.
To save £13m in the next year plans that have been published involve offering voluntary redundancy to staff, “deleting vacancies” and reducing dependency on expensive agency staff.
They also include reviewing spending on social care for adults and encouraging residents who need help to “develop and link into their own personal networks” instead of the council.
In a statement on the robustness of the budget, the council’s chief operating officer Jane West said the plans are “prudent” but the lack of clarity over future funding makes planning four years ahead “very difficult”.
She added that it will be “essential” to keep spending within the budget and meet the savings targets set out for next year.
According to Cllr West’s report, the “unprecedented financial situation” of needing to pay for social care means the council may have to eat into its reserves of £19m before the end of the year.