Havering’s financial constraints explained

Cllr Phil Ruck (Upminster and Cranham Residents’ Association councillor for Cranham Ward) has written the following article highlighting the reasons why Havering is currently facing financial hardship.

You may have seen many articles/social media posts about Havering Council potentially going bankrupt. What has actually happened is that the Council may not be able to meet its operating expenses with its current levels of funding. If this is the case, the officer responsible for the Council’s financial affairs (known as the Section 151 Officer) would have to declare a Section 114 notice, advising all to that effect.

It does not mean the Council is bankrupt, as the council will use its reserves to top up any shortfall. However, the Council does not have endless reserves and unless the funding/income issues are addressed, then the Council will ultimately become bankrupt.

You might ask how have we got to this situation. Well, in very simplistic terms, we have an ageing population in the borough (second highest in London and increasing) and this combined with a very high level of younger people, means our costs to cover these areas have increased and now represent 78% of our total costs, with this percentage increasing year on year. The burden of such costs falls upon the Council who get little support from central government.

When you consider the above plus the impact of inflation and higher interest rates, plus many other factors, it is not difficult to see how costs have risen.

The Council receives its income from Council tax, fees it can generate and government funding. But, Central Government funding has reduced from £70m in 2010 to £1.5m this year.

The above highlights the restraints the Council is operating in. The Council implements savings whenever it can. Of course the Council is not perfect and there are still areas to be reviewed but there are now no savings in areas to be made that do not dramatically impact the services we deliver. Basically the Council has no alternative but to make cuts and these cuts will not be what the current Administration of the Council want to make but has to make.

It is easy to point fingers of blame. But we are where we are to use an often quoted phrase. However, the government needs to address the inequality of its distribution of funding, particularly in the area of adult social care and children’s services. It also needs to increase the total amount of that funding to recognise the changes in our community, locally and nationally.

Havering Council is doing what it can, and records show it does ( Havering Council is recognised as a low cost/high standard provider of services) but things need to change. Time will tell how we do, unfortunately we are running out of time…

Cllr Phil Ruck

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