Finance chief declines to rule out inflation-busting service charge hikes

Cabinet member for finance, Cllr Robert Chapman. Photograph: Josef Steen / free for use by LDRS partners

Hackney’s finance lead has declined to rule out inflation-busting service charge hikes down the line, while insisting the council is not treating the fees as a “cash cow”.

On Monday, Cllr Robert Chapman, cabinet member for finance, delivered the council’s overall financial position (OFP) report from February.

It showed that the borough’s housing revenue account (HRA) is creaking under an “escalating overspend” of close to £14m in every area, driven mainly by legal disrepair cases and spending on building maintenance and staffing costs.

The vast majority of areas in the account are predicting a shortfall, while the use of the council’s reserves have accelerated as expenditure grows at an “unsustainable” rate, the report added.

The report also stated that management actions already in place “have not yet mitigated or slowed” the forecasted overspend.

Independent Socialist councillor Penny Wrout (Victoria) raised concern that the scale of the financial pressure showed the housing account was “in crisis”.

“How can the council meet its promises to improve council stock and housing repairs given the deficit it is running?” she said.

She later asked him to assure council tenants there would be no future service charge hikes above inflation to “try to make up for the HRA deficit”.

Cllr Chapman did not offer this guarantee, but said the local authority would “never look at service charges as a cash cow”, and would only increase them “where they could be fairly justified”.

He added that Hackney was not alone in facing these issues, having had to deal with burgeoning demand and more responsibility over housing – a situation “made worse by the previous government”.

To deal with the shortfall, the council has used up all of its repairs and maintenance ‘contingency funding’ pot, while also reducing spending on capital projects and drawing down nearly £5m from its reserves.

Monday’s exchange comes on the back of leaseholders and social housing tenants launching strike action over service charges.

Earlier this month, 32 inhabitants of Pitcairn House in Hackney Central wrote to the Town Hall refusing to pay their fees until the local authority deals with the state of their block by no later than the end of June.