Town Hall calls for more long-term financial certainty as council tax hike discussed

Hackney Council has called for more long-term financial certainty from government to allow it to plan for the years ahead.

Finance mandarin Ian Williams revealed this week that certainty in the funding settlement for the year was provided to his team “literally on the cusp of the Christmas break, which is far too late in the day for any sensible financial planning.”

Audit committee chair Cllr Nick Sharman has echoed Williams in speaking of the importance of shedding the “victim” role played by the council in waiting for the announcements on how it would be funded by central government.

Williams said: “We all can recognise the challenges we have had to deal with in preparing the budget for 2021/22. We again find ourselves walking back into that cycle we have been in for a few years now of the government only being able to announce a one-year spending round.

“One of the things I am very keen to push with government and the chancellor is we do need and deserve some certainty for the 2022/23 financial year well before we got it this year.

“I think we should lobby hard for the government to put in place something that even if it is a rollover plus budget for that year would be something to give us certainty and avoid having to do any unnecessary work identifying a range of options that anticipate Fairer Funding Reviews, business rates and the like.”

Williams was giving councillors an update on Town Hall finances coming into the new year, adding that with the government’s spending round predicated on the assumption that local authorities would increase their council tax by 4.99 per cent, and that Hackney Mayor Philip Glanville and his administration are discussing such an option ahead of final proposals later this month.

The government has provided a one-off local council tax support grant to councils in the forthcoming year to meet the additional costs of providing council tax support because of the pandemic with Hackney to receive £3.4m for this purpose.

Williams referred to earlier scrutiny sessions in which the council was looking at “eyewatering financial pressures,” in terms of forecast in April/May, with shortfalls of around £60m forecast in the spring of last year before there were any announcements or clarity on what support government was providing.

Following the four tranches of support provided by central government, the council’s overall deficit has been managed down to a much smaller level, though Williams characterised much of the government funding as “short-term sticking plasters,” with more work needed across the country on the long-term impact especially as the furlough scheme comes to an end, according to the finance chief.

In total there is currently an overspend of around £3m in the Town Hall’s general fund, with Williams predicting this could see a “modest uptick” having taken on board the further lockdown and losses of income, but “nothing that is going to cause us a problem in the short term.”

The Town Hall has also received a tranche of cash from the government in relation to the sales fees and charges lost income, having already received £4.5m in the last calendar year, with “good progress” seen in getting that money in, according to Williams.

On capital spend, departments in the council are forecasting spend of around £227m for the current financial year, with Williams highlighting the “major element” of this being the flagship Britannia development scheme, with “an awful lot of work” having been done to make sure that stays on track in “some of the most challenging and unprecedented times for doing major capital work ever.”

Quizzed on his administration’s manifesto commitment to develop plans to rejuvenate the Kings Hall Leisure Centre, Mayor Glanville has said that such a scheme is currently “a bit of a watch this space,” with more resources required to keep the centre open and safe and a “very clear business case” necessary with no easy set of sites to roll out the same cross subsidy model as at Britannia.

In a spirit of transparency Williams shared the fact that there are some elements of overspend in the council that are not related to the pandemic, with his report pointing to a non-Covid overspend having increased by £2.7m at the council since May.

His report warns that all services must be taking steps to contain further spending increases, warning that “failure to do so will make an extremely challenging financial situation very much worse.”

The financial boss also pointed to the council still being “very much in the foothills” in its recovery from the serious cyberattack suffered at the Town Hall, with chief executive Tim Shields revealing that the work to restore, replace and recover all systems affected by the criminal act will not be completed for “some time yet.”

Responding to quizzing from her colleagues, Deputy Mayor Rebecca Rennison, who leads on finance for the administration, moved to reassure that “no sudden financial decisions” will be taken ahead of next month, with the Town Hall’s budget shortfall closed following additional government funding, with a further few million pounds of savings to be expected in the forthcoming budget.

Rennison said: “Despite the rhetoric that austerity is dead, and despite the fact that they have brought forward extra funding around coronavirus, it is noticeable that we are still having to make savings in the middle of a pandemic just to balance our budget. I think that speaks volumes.”

Williams added: “We can’t assume that at the year end the external funding will cover all of additional spend and income losses, but what we can see from the forecast, as [councillors] asked would we see ourselves in the position some other councils have been in, albeit very few and far between, the Section 114 point – certainly we are nowhere near that.

“Equally, we mustn’t lose sight of the fact that it is very challenging, and we continue to work hard with all of the professional societies and through the Local Government Association to make sure we lobby for the funding that local government does need and deserves for its response to this pandemic.”