Another tax rise planned to pay for adult social care, as £18m overspend predicted
Council also reveals £27m was used from its reserves last year
Southwark residents could be in for another council tax increase next year, as the council tries to keep a lid on its predicted overspend of £18m in 2018-19.
A report for last week’s Cabinet meeting laid out the council’s budget predictions for next year, with an expected rise of three per cent due to adult social care demands. It warned of “a further £13.5m cut” coming from central government, after it was announced in 2016 that £47m would be lost over the course of three years.
But the report said pressures would also rain down from a one per cent increase in staff pay, and an anticipated rise in inflation of 2.3 per cent.
Last year the council withdrew £27.4m of rainy day money from its reserves to balance its books. A move which the report said was “not something we can afford to repeat”.
Residents are likely to see a three per cent council tax increase, labelled the (ASC) Adult Social Care Precept, under powers given by central government which would raise £2.7m specifically to pay for social care services.
The report said: “The indicative budget assumes that a three per cent ASC precept will be applied in 2018-19 to continue to protect services for our most vulnerable residents.”
Council tax was already raised by 4.99 per cent in April, as the government ended its seven-year freeze on councils’ ability to voluntarily raise tax, at the same time as they forced council to implement a three percent increase to pay for social care services.
Pressures on spending on social care, the report said, have come from increased demand, London Living Wage salary increases for staff, and inflation.
The report did not make suggestions of how departments would make savings, or how services would be affected. But it did say that a Budget Recovery Board has been set up to meet fortnightly since the beginning of 2017, with the aim of overseeing the budget cuts.
Councillor Fiona Colley, Southwark Council’s cabinet member for finance, modernisation and performance, said in the report: “We are asking officers to start drawing up proposals for efficiency savings, income generation and service reductions which will allow us to fill this significant financial gap and present a balanced budget for 2018-19.”
She said there are a “great number of assumptions and uncertainties” regarding the council’s predicted finances, and the wider economy. She also called it “rumours” to suggest that “austerity is over”.
The council also appears to be concerned about the future of its funding for schools, all £199.5m of which comes from a central government Dedicated School Grant. “[The] national funding formula for schools proposals [are] expected to reduce overall funding levels for schools, with the knock-on effect of schools reconsidering affordability of continuing to contribute towards services funded by the local authority,” the report said.
Southwark Liberal Democrats leader, Cllr Anood Al-Samerai, accused the Labour-run council of wasting money. “Staring down a huge financial black hole, they are continuing to waste money on vanity projects such as handing over a £1m to the Tate Modern and wasting precious capital on removing a full stop from the Council’s logo,” Anood said.
“In addition, they are considering the possibility of raising council tax for a second year in a row hitting hard working families in this borough. Hoping to cover up their complete and utter financial mismanagement through tax rises is unfair and we will stand up for local residents against this unacceptable policy.”
Cllr Peter John, Leader of Southwark Council, responded: “The Lib Dem-Conservative coalition government slashed funding for local authorities; in 2010, the central government grant provided 72 per cent of Southwark’s funding, but that’s now down to just 33 per cent.
“Despite this reduction in funding we are still committed to being ambitious for Southwark and meeting our manifesto commitments – but there are hard choices that have to be made. At the same time that our funding is being cut we are having to pick up the pieces left by this Government’s reckless failure to deal with the adult social care crisis, putting even more pressure on our services.
“Since 2010, we have saved £153m in efficiencies and improving the way we use resources, and we will continue to try and find ways to save money without having an impact on our frontline services. Unfortunately, there are limits to the efficiencies that can be made, so we are considering all our options, including a slight rise in council tax, as an increase of just 1.99 per cent in council tax would significantly help to reduce our deficit.”
A detailed plan of the council’s spending for 2018-19 will be delivered on January 22, to be reviewed by the council Overview and Scrutiny Committee.