Council to slash charity grants by more than £800k amid budget shortfall

Cllr Robert Chapman, cabinet member for finance. Photograph: Hackney Council

Hackney Council is to cut grants for local charities by more than £800,000 in a bid to deal with its multimillion-pound budget overspend.

Following repeated warnings about tough decisions, the borough’s finance chief Cllr Robert Chapman (Labour) last week announced its largest planned spending reduction would fall on the voluntary and community sector (VCS).

The Town Hall’s overall financial position (OFP) report, put to cabinet members on Monday 28 October, reminded the council of its projected £37m overspend and the actions being taken to rein it in.

Cllr Chapman said: “We’re undoubtedly in the difficult situation and undoubtedly will be taking tough measures ahead.

“We’ve done our best to propose measures that will start the process of bringing our budget into balance. This is the beginning.”

“There’s no point in pretending these things don’t have impact,” he added.

Charities and voluntary organisations around the country apply for local government grants every year.

Last year, more than £750,000 in funding was awarded to 37 groups in the borough.

These included Hackney Council for Voluntary Service (Hackney CVS), African Community School, Community Centre for Refugees from Vietnam, Laos & Cambodia, Hackney City Farm and Hackney Foodbank.

The report’s savings proposals stated that “while we must make these cuts, we remain committed to supporting the voluntary and community sector in other ways. We will do all we can to help organisations through this period.”

Alongside cuts, the Town Hall is also planning a redesign of the grant, “in consultation with partners”.

The second-largest saving the council has proposed for next year is to take £800,000 out of its corporate energy budget for use elsewhere, following a projected fall in energy prices.

Meanwhile, a 100 per cent premium on second homes and empty properties will be levied on owners to generate a proposed £700,000 for the local authority.

Other planned savings include:

• Scrapping two council director posts (£303,000)
• Automating and streamlining finance directorate procedures (£333,000)
• Using artificial intelligence (AI) to automate penalty charge notice processing (£150,000)
• Creating the council’s own car pound (£250,000)
• Charging for a number of legal services offered by the council (£78,000)

Temporary accommodation has been the biggest drain on the council’s coffers in recent times, costing the borough an expected £12m extra on homelessness prevention alone.

The Town Hall hopes that finding new ways of sheltering its unhoused residents would allow it to save £2m per year moving forward.

Despite changes to its penalty notice scheme, the council is already behind on its parking targets for the previous year.

The report states: “Recent parking income levels have been significantly impacted by vandalism to cameras resulting in lower activity than expected in PCNs issued across 2023/24.

“The income position will need to be carefully monitored in 24-25 to understand the ongoing impact of this activity and of those components of the savings plan that have dependencies on other council projects.

“Current forecasts suggests significant risk of achievement against this target.”

While Mayor Caroline Woodley acknowledged the stark challenges facing the borough, she stressed that the Town Hall was prepared to confront them.

“Having been office for almost a year as mayor, I’ve been seeking to stabilise the council with our now permanent chief executive and to support continuation of service delivery—and this so often means asking more of staff with less resources,” she said.

“I know its imperative to look out for our financial sustainability and our capacity to change. Not only in terms of where savings can and must be made, but also to advance our work in transformation and how we might work differently.

“We’re better placed than some to meet the challenging we’re facing now and that we’ll face ahead.”

An updated medium-term financial plan for Hackney, showing how the borough’s finances will be managed over the next three years, is set for publication in November.