Tax increase and £11m in savings needed to balance Hackney's budget

Hackney's Mayor has responded to The Chancellor's spending review in the wake of the coronavirus pandemic. Picture...

Hackney council is set to make £11m in savings to balance the local authority's upcoming budget. - Credit: PA

Amid a global pandemic and after more than a decade of austerity, Hackney Council has said it must make £11m in financial cuts to balance the coming year’s budget.

Speaking to this newspaper ahead of a cabinet meeting on February 22, the council revealed its overspend is currently forecast at £3m, and this calculation does not yet include the full impact of the current lockdown, which will not be clear until the end of the financial year.

Council tax is set to increase by less than £1 extra per week for most households but the local authority is proposing eligible claimants of working age, in low-income households and regardless of property band, will receive a discount on their bill and not face an increase in council tax.

Hackney’s mayor Phil Glanville said the increase in tax is good “value for money” and said: "I have a manifesto commitment to only increase council tax as much as necessary – we don’t take that increase at all lightly.”

He added, however, that government expectations of increasing local spending power and funding adult social care via increases in council tax, as was set out in a recent spending review, “is not sustainable” and in need of a “national solution”.

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£53m of the £58m forecasted overspend on the council’s general fund relates to “additional expenditure” and “reduced income” due to Covid-19, while the non-Covid related overspend is currently calculated as £5m.

Emergency government funding and council tax and business rates reliefs have helped reduce the deficit to £3m, but savings still necessary to balance the 2021/22 budget will be presented to the cabinet meeting on February 22.

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However, Mayor Glanville says the savings made will not get in the way of Hackney’s commitment to rebuild a better borough during the pandemic.

He said the council will not close services, just reform them to run more efficiently, and vowed it will continue to invest in areas of need and hardship, as well as “some of the most vulnerable people in our borough”.

Savings will be made in various areas, including £540,000 in children and families services, £332,000 in Hackney education, £1.6m in adult services and £217 000 in public health.

For example, some services supporting people with “higher-level needs” could, the council believes, be better served, and funded in “a more collaborative way” with the local NHS.

The mayor explained that during the development of the budget, if savings made could have a negative impact on services, the council will review and “look at other ways” of delivering them.

Portrait of Mayor of Hackney Phillip Glanville

Mayor of Hackney Phil Glanville. - Credit: Hackney Council

“There is a good process using scrutiny and onward engagement to make sure the decisions we are making are properly safe and protect those most vulnerable,” said Mayor Glanville.

The council plans to continue to invest in sustainable projects and green spaces as well as work to deliver more insourced services.

While there are risks and benefits to insourcing, the mayor says it is often “more efficient and cheaper” in the long run and “better integrated”.

He added that investment in green initiatives have financial and environmental incentives: “You wouldn’t see such an ambitious programme if it was just purely on wishing to tackle climate change alone.”

Due to a cyber attack last year, the council also revealed it is reserving about £2m to build its online services “back up from scratch”.

However, it says some systems would have needed to be upgraded anyway.

Still, despite this year's financial challenges, the mayor said “Hackney is in a better place than other boroughs” due to “stable financial management".

But he also stated the council must be “cautious” in developing upcoming and future budgets, particularly as “irrecoverable losses” in council tax and business rates are forecast to cost £2.25m each year for the next three years.

The number of people on universal credit (UC) tripled last year, according to the Department for Work and Pensions, from 12,395 people in January to over 33,000 by December 2020.

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