The coalition government has announced funding cuts of 8.9 per cent (£32.9m) to Hackney in 2011-12 and 6.7 per cent (£22.2m) in 2012-13. The council has warned that whilst frontline services remain its priority, cuts of this nature will put “considerable strain” on the services it provides and lead to some “very difficult decisions.”
The figure of 8.9 per cent represents the government’s estimate of the likely reduction in the council’s ‘spending power’, once all income sources are taken into consideration.
Cllr Ian Sharer, leader of the Liberal Democrat group on Hackney Council, has welcomed the fact that the cuts will be limited to 8.9 per cent but said, “We believe that the level of cuts is too high for an impoverished borough like Hackney. Because the government has chosen to freeze the council tax and impose reductions solely on the government grant, rich boroughs which have high council tax revenue will have minimal reductions to their social budgets while the poorest will have the most. We can see how this happened, but it is a bizarre result and cannot be right.”
Hackney Council agreed to freeze council tax for the fifth year running in March 2010. In November 2009, a council report had predicted that Hackney would then need to make savings of between £12m and £15m each year for three years starting in 2011-12 to balance future budgets (as reported in the Citizen in March 2010).
The cuts recently announced by central government will add an estimated £33m to that figure in 2011-12, bringing the total savings required to approximately £48m. Over the next two years, Hackney can expect to have to find £82m in savings, including £27m envisaged in 2009 plus £55m required by the government’s recently-announced plans.
The 8.9 per cent reductions faced by Hackney this year are considerably higher than the average of 4.4 per cent for English local authorities. Yet Hackney still receives more cash per person from central government than any other local authority in England. The Department for Communities and Local Government notes that funding per head for Hackney residents will be £1,043 in 2011-12 compared with £125 per head in Wokingham.