Havering Council balancing on the brink of bankruptcy-A ‘114’ could be issued within months.
“This year we are having to make even harder decisions than we did last year,” says Havering Council leader, Councillor Ray Morgon. Despite cuts to services, increase in council tax, the government cuts to local council funding means that Havering’s expenditure is not meeting the resources it has financially and as such the council has admitted it could be months away from issuing a section 114. This means the council declares itself bankrupt as we have seen across numerous other councils and a government commissioner is sent in and the council loses all its ‘local democracy’.
“We have had ten plus years of austerity cuts and funding freeze. We have the second oldest population in London and the second highest children aged 0-14 years growing population in London now. This has put incredible pressures on us as a council,” said Chief Executive Andrew Blake Herbert.
“We are a very efficient and low cost council, but it has been hard for us to make savings and now we are not cut to the bone, but actually cutting the bone,” added Mr Blake Herbert.
Havering’s Strategy Director Kathy Freeman stated: “We are very close to issuing a section 114, even six months away from this happening. Our average resources cannot meet the financial requirements.
“We are in this position because of long standing under funding. We have seen increases in all our social care, our homeless and we are struggling to find the money. We have a legal duty and have limited options and a 23 million overspend. The gross budget gap is 37 million,” she added.
“We don’t have enough reserves, our choices are becoming harder and harder. We don’t want to issue the 114, we are doing everything we can,” she finished.
Councillor Chris Wilkes stated: “Our reserves are low, we have made savings but external pressures such as the ramping up of prices means we are often held to ransom when paying and getting penalised.
“We have seen the pressure on housing increase with the private sector collapsing,” he added.
“What we are seeing this year is just how quickly things are ramping up,”said Mr Blake Herbert. “Housing, adult and children’s social care, inflation, Covid has meant that our timeline has all been bought forward.”
The council has been taking this to a national level and asking for an increase in government funding.
“The government must make more funding available to councils and not rely on tax payers,” said Councillor Morgon. “More needs to go into social care. We have never seen this level of demand. We have very expensive care packages that we are having to put in place.”
Councillor Morgon went on to quote how one child in the borough has a care package that costs the council £28,000 a week.
Kathy Freeman the Finance Director finished by saying, “Our ongoing resources do not balance the needs of the borough and if the overspend exceeds our resources, then we will have no choice but issue the 114.”
The latest budget will see very tough decisions undertaken and even further cuts made to try and save Havering from declaring itself bankrupt.
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Council Tax has been decreasing over many years in REAL terms. It’s too low and there isn’t a single councillor that will acknowledge that. As a proportion of the value of houses council tax is miniscule. The basic banding of council tax hasn’t changed since 1991 – 32 years- and house prices have exploded since then. Neither the government nor councillors have the political courage to say what needs to be said. They’d rather abandon democracy than be the people that put up council tax to the level needed
In reply to odeboyz
You really do write a load of claptrap sometimes.
Here in Havering, we pay one of the highest council tax rates than many other boroughs.
The issue is not the level of council tax, the issue is the funding received from the Government has not kept up with demand and reality.
Several years ago the government devolved responsibility for many areas of care to the local authorities. The amount of money each authority would receive to cover this burden was based on several factors, including population, age and make-up of the society. The Government are using outdated population information to dish out money.
It penalises Havering residents while making other boroughs rich.
Raising council tax will only add to the misery many feel. Many are already scrapping around to make ends meet.
The Government were giving Havering Council £70M a year to cover some of the devolved responsibilities (i.e. Children and Adult social care). This has been reduced over several years. This year Havering Council received around £1.5M. Yet the number of elderly and young people has only increased.
Raising council tax equates to less than £2M per 1% increase. We would need to raise council tax by at least 30% to start to close the gap. This would not be acceptable to many and would cause major issues.
I question your staement where you say none of the councillors are willing to acknowledge the issue – are you including your beloved Labour councillors in this?
There is a massive shortfall in what the government used to give us . since 2010 atleast this has been getting drastically reduced and down to the bones now . There is no sense in raising council tax as currently havering has one of the highest numbers of people in council tax arrears
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