The government is “minded” to grant approval for Havering Council’s £54m request for financial support – allowing the authority to balance its 2024/25 budget and avoid a section 114 notice.
Havering’s budget was approved in a Full Council meeting after the government’s intention to give “in-principle approval” for the capitalisation direction was revealed.
The authority is facing a £32.5m budget gap this year, which rises to £81.9m over the next four years. Havering blamed “increased pressures outside its control and a year-on-year reduction in government funding”.
Havering has the second oldest population in London together with one of the fastest growing young people populations in the country, the council said. This has led to an “unprecedented demand” for adult and children’s social care.
There has also been a “significant rise” in homelessness and temporary accommodation costs as a result of the cost of living crisis and a reduction in available housing.
Measures to make savings or increase income include putting up council tax by the maximum allowed without a referendum, dimming lights, and increasing fees for registration services, parking, bulky waste and green waste collections. A review of children’s centres and libraries will also be launched.
Ray Morgon, leader of Havering Council, said: “We are seeing one of the most difficult times for local government ever. Agreeing this budget has been a painful process for all concerned due to the tough financial position we find ourselves in.”
Alongside the cost pressures in social care and homelessness, Morgon said “a broken government funding formula with year-on-year reductions without taking into account the rise in demand and costs have left us with no choice but to apply for a capitalisation direction”.
Although pleased to receive agreement from government over the capitalisation direction, Morgon added that it only “delays the inevitable for the next year when we may have to apply for another one. This is why there needs to be a fundamental change in how we are funded.”
Havering Council will “continue to look at more efficiencies and lobby all political parties for sustainable local government” but if the situation “is not resolved, we will regrettably see further reductions to non-statutory services in the future and/or further loan requests”.
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