£40m shortfall feared in Hackney Council’s coffers
Hackney Council needs to find nearly £40m over three years to balance its budgets
Hackney Council has revealed a budgetary black hole of nearly £40m in its financial forecasts.
It has been warned that between £12m and £14m must be found each year for three years starting 2011/12 to balance future budgets (see table below).
The sum is significantly higher than the average of £8m savings made each year over the last four years, and the figures are based on hypothetical 2.5 per cent annual council tax rises.
If the Council is to continue its five-year freeze on the tax, the budget hole threatens to be larger still.
The Chartered Institute of Public Finance and Accountancy (CIPFA) predicts that average council tax increases in London will be just 0.1 per cent this year as many boroughs follow the lead of the Mayor of London, Boris Johnson, in opting for a tax freeze.
But CIPFA’s head of policy, Ian Carruthers, warned, “There’s big uncertainty about what happens after 2010/11. All the evidence is that the government is going to have to make significant cuts.”
In its 2010/2011 budget the Council is planning to slash spending in several areas, including children and young people’s services, supported housing, mental health care, libraries and refuse collection.*
Dame Margaret Eaton, chair of the Local Government Association, said that local authorities were being hit by a “perfect storm” in the recession with increased demand for their services but less cash to spend on them. Many councils are looking at how to cut their budgets by 15 per cent over the next three years.
Note: the table below was added to this story at 17.50 Thursday 4 March 2010. Source here.
Indicative budget forecast 2011/12 to 2013/14, Hackney Council Cabinet papers, 25 Jan 2010, p195
*See also the Council’s spokesperson’s comments of 5 March 2010 below.
Hackney Council has tonight (Wednesday 3 March) agreed to freeze Council Tax for a fifth year running – without cutting any frontline services.
We are the only council in the country to have achieved this saving for our residents without cutting services.
The reason we’ve been able to do this is due to careful financial management which has led to over £40million in efficiency savings during the past five years.
These savings haven’t been achieved by cuts in services, instead we’ve been making the way we do things more efficient, such as improving Council Tax and housing rent collection, and reducing insurance premiums.
We are not slashing spending on services. In fact, we have just reopened Clapton Library and next year we will open a new library and public archive in Dalston, while the budget for Children and Young People’s Services is due to increase.
Hackney residents rightly expect high quality services and we will continue to provide these services because we know they are important to local people.
The council has made it clear that there is no ‘£40 million’ budgetary black hole in its finances and that uniquely it has frozen council taxes while improving services, through its pro-hackney citizen policies and sound management.
So when are you going to publish an apology and a front page retraction of your malicious story, set in the same type face as your scurrilous headline?
The story has been updated and additional material has been provided to substantiate the claims it makes. – Ed.
That a Labour Council promotes “Council Tax freezes” – which are effectively funding cuts – is a disgrace. Especially so in Hackney. This panders to the selfish view that taxation itself is bad.
Only unfair taxation is bad – taxation – where those who can afford to make a contribution is a hallmark of a fair society. If we want good services for all – we must pay for them.
In an already challenged borough – these “freezes” must surely make it very difficult for our council to lobby for much needed funding from central government. This situation is likely to worsen when, as widely predicted, the Conservatives form the next government. They are unlikely to look favourably on funding requests from Labour controlled administrations who have refused to raise funds through council taxation.
Better local taxation would bring many benefits in Hackney – improved access to services for the most needy – such as sports and leisure facilities, park wardens to improve safety, better food in schools, better care services at home, better policing, health promotion, smaller class sizes, top up tuition and better front line services.
Instead our council is once again propagating the selfish view that paying for such services is undesirable and that ever decreasing payments are morally defensible.
The Citizen’s selective reference to a section of a January financial report fails to justify either the headline or the reference in the story to “slashing spending”.
Hackney Council maintains that the Citizen is being entirely misleading with its five examples of “slashing spending” and is also failing to understand that it is perfectly possible, and indeed desirable, to make efficiency savings which not only help to avoid passing on increased costs to taxpayers, but also deliver an improved service.
The Citizen alludes to the £100k saving made by introducing self-service facilities in libraries, but fails to mention the corresponding £600k increase in staffing and support at the expanded Clapton and new Dalston libraries – actually a net increase in the libraries budget of £500k.
The Citizen’s reference to a reduction in “supported housing” is completely misleading. The saving in the budget book arises from increased expenditure in Supported Housing with Care. In fact, the explanatory statement adjacent to this heading in the budget report that the Citizen chose to ignore is as follows:
“This programme, approved by Council in November 2008, will maintain people’s independence in the community through the provision of housing with care and support. This will enable people from all of the client groups to remain in their own home rather than be placed in residential care often out of borough and away from their families. As a result the number of clients seeking residential placements will reduce.”
Similarly, savings made in both children and young people’s services and mental health care arise from having increased the support to service users in their own homes. This is an option which is not only usually preferred by service users and their families, but also more cost effective than placement in residential institutions. The Citizen also does not mention a corresponding £630k increase in Adult Social Care for both elderly people and young adults with learning disabilities.
The Citizen’s reference to reducing refuse collection costs fails to explain that this is a reduction in the costs of collecting commercial waste from businesses, as well as additional income from new contracts, resulting from the introduction of time-banded collections on major roads, as made clear in the budget report. Not only is this an absolute efficiency saving, it delivers an improved service outcome in the streets being clear of commercial waste for a much greater period of the day.
The “Hackney Council spokesperson” is addressing this year’s budget even though the Citizen’s report of a £40 million shortfall is clearly directed to the problem there will be in future years with an almost inevitable slashing of grant from central government.
As Hackney has a high level of grant coming from the exchequer rather than local sources it is particularly susceptible to a reduction of Government support .
Pretending that the effects of the economic crisis will pass Hackney by are simply not credible.
Hackney [Council] will not be able to squeeze much more out of its historically low collection rate or use its favoured trick of passing costs onto the poorest in our community by shifting expenditure on to service charges paid by those living on housing estates.
The best way to protect services over the coming years is to address the highly centralised and resource-hungry command and control bureaucracy that is Hackney [Council …]
Hackney Labour spin muppetry in full flow. Trouble is, PR boys, you’re still £40m in the hole. Keep dancing, but we haven’t forgotten.
How could we forget when we have repeated examples of your profound incompetence on a yearly basis? Do we really have to spell it out?
ITNet
The Vortex
Clissold Leisure (the debacle that keeps on giving)
Broadway Market
Dalston shambles
Feel free to add to the list.
Guys, we can’t keep doing the same thing and expect a different result – you can’t keep voting for Hackney Labour and expect them to buck up their ideas.
I want them out.
I’m going to hold my nose for Labour and vote for Diane Abbott – but I am voting Andrew Boff, Conservative for Mayor of Hackney. I don’t care if the Conservatives have a barstool running for Council in my Ward – they have my vote. I’m sick of these idiots.
Wotcha!
Apologies in advance as I don’t know nuffink but I suggest that in current uncertain times, perhaps the Council should demonstrate value for money.
Perhaps such things as the headlines related to the Financial sector are indeed fostering a mentality in the general public that might have them screaming for both blood and value for money.
This mentality may easily overspill into the expenditures of local government too.
– After all it’s all public money, isn’t it?
Exploring the wilder shores of local Government performance stats next then, can I ask, is there any information published on the internet that:
– relates to the effectiveness and efficiency of a Council;
– specifically shows trends over time in an easily digestible format perhaps similar to the familiar FTSE index graphical display (as opposed to pages of confusing and obfuscating data);
– shows a separate index for each Council;
– would allow the general public to easily compare one Council’s performance against another on a single chart using the above graphical format?
If, as I strongly suspect, the answer is no then I suggest perhaps if such a tool were to be invented and designed sufficiently well and made freely accessible on the websites of local government and on the websites of national and local rags too, then this could be used by the general public, to more accurately assess the worth of the local tax collected by any specific Council.
– Such an app should definitely also simplify and clarify forecasts made by each Council!!!
Local papers and the general public would then have a direct and readily accessible source of information and everybody could express their views whilst all singing from the same hymn sheet as it were.
It could also be used by Councils and/or their auditors as appropriate, to clearly assess their performance and to find and focus on improving areas that were causing a downward curve in their performance index.
– They could do this by tracing back to the data that was causing the downturn in their charts if necessary.
Should anyone invent and publish the application described above, they should definitely call it the dogmabogma index or dbIndex for short.
On the other hand you could say I’m nuts and I’d have to agree.
Anyway, as always I’m blind of what’s round the corner, still, I’m feeling agreeable so I choose to believe the comments made by Hackney Council in the Hackney Citizen website and offer my best wishes to all concerned.
Sla!
db
As a former finance journalist I’ve been trying to work out how big a deal this is, and looked back to see what they were projecting for the past three completed financial years 2006 to 2009.
The January 2010 report you’ve published states a £38.89m projected shortfall .The equivalent finance report from January 2005 had the very same section 24 which appears to project across 06/07, 07/08, 08/09 a £29.44M shortfall. Instead they went on to have three years of balanced budgets including tax freezes.
The equivalent finance report from February 2007 claims a projected £21.36M deficit for the next three years (08/09, 09/10, 10/11) yet they have continued to set balanced budgets and frozen tax.
OK, the projected shortfall is now £9.5m bigger than in 2005, but that’s not surprising in the current economic climate.
Answering my own question, it would appear that the “£40m” is in the same ball park as previous projections, so not exactly a “black hole”. Moreover, these reports seem to severely underestimate what savings can actually be achieved to reduce these kinds of figures.
One more for Kris’ list i.e.
“How could we forget when we have repeated examples of your (LBH) profound incompetence on a yearly basis?
Do we really have to spell it out? ITNet; The Vortex; Clissold Leisure (the debacle that keeps on giving); Broadway Market; Dalston shambles”…Feel free to add to the list.”
Here’s my addition Kris… the St Leonards’ Court Estate (Hoxton, South Hackney)… 7 years of shambolic lies and deceit over our (falsly promised) Regeneration Appraisals Options for our 1000% ill-maintained estate… and then, an Interim Repair Works program costing over £300,000 of public money that left our homes more damp and mildew than ever before?
And then we now find that the LBH Housing 6 month post-interim works ‘review’ has all of a sudden been completely abandoned… well, well, surprise, surprise… no review for LBH Housing’s utterly failed Interim Repair Works Program on St Leonard’s Court?
LBH as ‘shambolic’… this is the greatest understatement of the past 40 odd years Kris!
[…] The stories he said had been overlooked by the local paper include the fact council tax had been frozen in Hackney and how he’d shifted £65million of resources from back to front office services in the last five years. In other words, the papers weren’t covering the positive stories he wanted to put out there. Perhaps that’s because the big black hole in the council’s finances causes more concern … […]