Council Statement: Government settlement

Published: Wednesday, 20 December 2023

Statement from the Leader of Havering Council, Cllr Ray Morgon, about the Government settlement.

“Once again the Government has short-changed local government in the recent finance settlement.

"Havering is on the brink of effectively declaring itself “bankrupt” by issuing what is known as a Section 114 notice because the cost of social care, homelessness and inflation is greater than the money we receive.

"We have been warning the Government for some time about this, and despite these warnings, they have not helped us deal with this problem.

“Like a growing number of councils, we have done everything to reduce our costs where over the years Government funding (Rate Support Grant) has reduced from around £70 million in 2010/11 to under £2 million.

"The Council has also made over £160 million of savings plus efficiencies and fee increases over the same period and has sold more than £160 million of assets to fund our capital programme.

“Although we have seen a small rise in core spending power in the settlement, which includes increasing Council Tax to the maximum without a referendum, it is a mere drop in the ocean and goes nowhere near to meet the rapidly rising costs to carry out the services that we must provide by law.

"The rise was even less than what we were expecting.

"Our population has the second oldest population in London and now has one of the fastest growing children's populations in the UK, which means our costs with inflation are predicted to be over £45 million next year, yet our grant increase is just a mere £5.6 million. 

“There is also uncertainty and decreases in other grants such as the Household Support Fund which impacts those who are suffering from the cost of living crisis. 

"The only other solution offered by the Government is for councils who are seeing the most severe financial shortage to increase council tax above the threshold without a referendum.

"We find this insulting as the only reason why most councils are in this position is because of the lack of funding from the Government to deliver social care and homelessness services which we have to do by law.

“We also don’t think it appropriate or fair that council taxpayers should take the burden of these costs, for government failure to deliver on the fair funding review and the use of data that is over 10 years out of date.

“We are however getting to the point where we have no choice but to push ahead with issuing a Section 114 notice or applying for a substantial loan from the Government.”