Southwark plans to hike council tax by 4.99 per cent to help plug gaps in funding created by a huge COVID-19 shortfall.
As the News reported in December, the council faces a £12m shortfall after stepping up emergency services to support people affected by COVID-19.
At last week’s cabinet meeting, finance and resources chief Rebecca Lury told her colleagues that there was ‘little in the way of new money’ coming from central government, and to protect frontline services including adult social care she had little option but to raise council tax by the maximum permitted.
A support scheme helping 15,000 working-age households, and 100 per cent relief for 6,700 eligible pensioners will be unchanged.
In budget papers Cllr Lury explained: “Whilst the vaccine roll out brings hope, the current lockdown restrictions mean we continue to face additional costs through our direct interventions to support our communities and we are experiencing significant pressures from lost income through fees and charges.
“Alongside this, as our residents and businesses face increased pressures this has a knock-on impact on our borough, with reductions in tax collection in both council tax and business rates. In addition, we continue to face significant demands and pressures on our services, in particular social care, homelessness, welfare support, leisure and high needs services.
“This budget includes commitments and growth of £16.757m principally in these demand-led services to ensure that service budgets are sustainable.
“Despite the government’s announcement of additional funding for local government through the Local Government Finance Settlement, there was little in the way of new money with the largest part of the increase in spending power coming from council tax increases and the social care precept.”
A balanced budget for 2021-2022 will largely depend on drawing down on reserves – though by how much is yet to be determined.
The council now needs to make £12.175 million in savings – £2.7m of which are expected to impact on services that are not ring-fenced.
Cuts and efficiency measures include permanently closing the Fred Francis day centre, savings of £4.2 million in the environment and leisure department – including by suspending the flagship policy of free theatre tickets for children (an easy win given the programme had not started due to COVID-19), and £529,000 from a restructure in the planning and regeneration department and by cutting down on ‘professional fees on major regeneration schemes’. Contracts and agency fees will also be reduced where possible, with restructures and job losses at Tooley Street – including some senior management posts – all on the agenda.
The pandemic has intensified a trend that has seen the local authority’s reliance on locally generated income rapidly rise since the credit crunch.
General support from central government has decreased from £304m in 2010-11 to £152m in 2021- 22 – a real terms decrease of around two thirds.
Meanwhile, council tax and retained business rate growth have increased over the same period by £71m. Locally generated income is now responsible for 48 per cent of the council’s funding compared with nineteen per cent in 2010-11.
Areas expected to see rising costs include housing and temporary accommodation, a £500,000 fund for tackling food poverty, £300k for Southwark Stands Together project into racial equality, and £100k for the COVID-19 community hub.
The final budget will be presented to the Council Assembly on February 24, before being set in law by March 11.