Havering Council is planning “the highest council tax increase for some years” in April as it struggles with an almost £10 million budget gap caused by COVID-19.
Reports prepared for the council’s overview scrutiny committee last night (February 16) say the council expects an overspend of £9.9 million by April, despite “eating into” its reserves.
Budget proposals for the next financial year, which will be discussed by the cabinet tonight, suggest raising council tax by 4.5 per cent in Havering, just shy of the maximum amount possible.
Councils can raise council tax by up to 4.99 per cent without a referendum and neighbouring Waltham Forest and Redbridge are both proposing the maximum increase next year.
Cabinet member for finance Cllr Roger Ramsey (Con, Emerson Park) told the committee the council wanted to “stop short” of the maximum increase because of the “difficult financial situations” residents are likely to be facing.
He added: “Extra spending and pressures, together with a reduction in income and an inability to introduce savings, have led to councils having to take money from its reserves.
“We have had substantial exceptional funding from the Government but still it has led to significant eating into those reserves.
“We have not been led to the severe difficulties other councils have faced but it has been a very taxing situation for us.”
Council tax for a Band D property will be £1,893.30 if the proposals are approved, with £1,529.64 paid to the council and £363.66 paid to the Greater London Authority.
Of the 4.5 per cent increase suggested by the council, 3 per cent of this extra money will go solely towards funding adult social care in the borough.
The report prepared for the committee notes that the 3 per cent increase is necessary “to avoid further cuts” to this under-funded care.
The council’s chief financial officer, Jane West, said the council was taking a “pessimistic view of what business rate collections are likely to be” next financial year.
She said the council was “going to need to start borrowing for next year and the year after”, although she noted that low interest rates meant this was not a bad year to be doing this.
Despite the council’s financial difficulties, the cabinet member for housing, Cllr Joshua Chapman (Con, Romford Town), said the council plans to spend £20 million buying back “as many as 70” council homes next year.
A ‘welcome and assessment centre’, also mentioned at the meeting for last year’s budget, will be built in Harold Hill to house “those unfortunate enough to lose their homes” while they wait for accommodation.