Tower Hamlets General Revenue Budget 2016-17 amendment
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The main Budget report identifies the financial position facing Tower hamlets Council and the politically motivated attack on council funding by the Tory Government. The Chancellor’s plan to reduce central government grants to Local Authorities will have the effect of reducing the Government’s financial responsibility to Tower Hamlets Council by 50%. By 2018/19 this would be a total of £153 million cuts since 2010.
Tower Hamlets residents are still on average amongst the poorest in the country. However the average income for those coming to work in the borough is the second highest in the country, just behind those who work in the City of London. These facts highlight the enormous inequality facing the borough which has increased because of the Tory pursuit of austerity.
The overall political strategy of ‘austerity’ is to secure the wealth of the richest in society regardless of the insecurity and hardship caused particularly to the poorest but in reality to the vast majority of people. For this reason we are opposed to ‘austerity’ and the attacks on the budget of this council.
The Government announced the grant for Tower Hamlets in December although there could still be some small adjustments to this figure. On top of this the Mayor has agreed the Council needs to spend £23 million on new responsibilities or to meet needs that have not been properly funded in the past. The real funding gap facing the Council for 2016/17 is £44 million.
This poses a political crisis for the Mayor in his first full year in office. This crisis is a direct result of Tory austerity cuts facing Local Authorities across the country and not a unique situation facing Tower Hamlets Council. The Mayor may choose to blame the previous administration for financial mis-management but nothing could be further from the truth.
The Council’s General Reserves, monies the Council has saved up, have increased since 2011 to £71.5 million as published in the Draft Statement of Accounts for 2014/5. This financial year 2015/16 it is planned to use £7.8 million from the General Reserves and £1.8 million from the earmarked reserves, money saved for specific projects, to bridge some of the funding gap in the Council’s budget.
These healthy savings mean that the Mayor is proposing to spend £25 million from these funds to help him balance the budget for 2016/17. On top of this he is now planning to cut £17 million of cuts to services on top of £4 million that he has already signed off.
However the situation will get worse if the Mayor chooses not to make a clear stand and fight for the full resources needed to run our borough’s services. His strategy (MTFS) predicts the Council will face a fresh funding crisis of £30 million in 2017/18 followed by £18 million in 2018/19 and £10 million in 19/20.
The cuts identified for 2016-17 fall into the following broad categories:
• Reducing or ending the provision of services
• Transferring financial responsibility from the general fund to other specific areas of council funding
• Transferring financial responsibility to other public sector organisations
• Increasing contract income from the contracts with the commercial sector
• Savings achieved because of reduction in use of services
This amendment opposes all cuts to services provided by Tower Hamlets Council. We are opposed to transferring financial responsibility to other specific areas of council funding such as the DSG. This transfers the decision for providing these services from the Council to other managers of Council services, for example schools in the case of transfers to DSG e.g. the cuts to school crossing patrol service and the Gorsefield study centre.
We are opposed to reducing the level of the Council’s expenditure to meet the Governnment’s expenditure targets. However, if service levels and jobs can be guaranteed by finding funding from other public sector bodies, without forcing those bodies to make cuts elsewhere, we would not oppose these measures. Likewise there are some proposals, for example the reduction in provision for the London Taxi Card that could bring genuine savings for the Council without job losses or cuts in services.
All of these items should be explored in detail and any real savings that accrue from these measures should be offset against the use of reserves required to fund the budget gap, or used for growth of council services in priority areas to be agreed by the full council.
There are areas of the savings proposal that involve the commercial sector or private sector partners. We are opposed to any further privatisation of the Council services and want to see the Council move to bring all privatised services back in house.
There are others for example the income generation from CCTV that could bring new income into the Council. We agree where these can be achieved that they reduce the use of reserves required to fund the budget gap.
The Council’s General reserves stand at £71.5 million and after the potential use of £7.8 million could fall to £63.6 million. We propose using £40 million from the General reserves to fund the Council’s budget gap for 2016/17. This would still leave the General Reserves at £23.6 million which is above the £20 million estimated by the Chief Finance Officer to cover for risks to the budget.
Campaign to Fund Our Services
We accept that the use of reserves is not a long-term solution to the financial problems imposed on the Council by the government. However it gives breathing space for the Councillors to develop a mass political campaign throughout the borough for resources to meet the needs of residents in Tower Hamlets and link up with other councils and anti-austerity campaigns.
The Mayor is faced with a stark choice: Defend Council services now or start down the road to cut Tower Hamlets spending by £75 million by 2020. If the Mayor’s budget is passed and £17 million cuts are made this year there will be opposition from service users and the workforce in this borough. The Mayor will be setting himself and his party in opposition to the needs of the borough. In doing so, he will create division in our communities to push these cuts through: He will justify cuts to some services whilst justifying that others should remain, for the time being!
The Mayor will no doubt claim he has autonomy to carry out local wishes and not those of his political leader, Jeremy Corbyn the leader of the Labour Party. But Corbyn’s landslide victory to become leader of that party was on the basis of a commitment to fight the Tories’ austerity measures. That has already brought about the successful defeat of cuts to tax credits – a major attack on the poor. He has written to Council leaders to implore them to defend Council services, in a letter at the end of last year. Tower Hamlets Mayor should start by refusing to cut services now whilst he can still balance the budget.
Discretionary Earmarked Reserves
The Council has an earmarked reserve for Employment and Corporate Initiatives. Officers are tasked with exploring a £10 an hour minimum wage policy across the Council and Council contractors, and report on any drawing on reserves that would be required from 1st April 2016.
The Council must take urgent action to solve the housing crisis, including building council homes. The Council should both raise capital and use money from the capital reserves and discretionary earmarked reserves, to match fund the £29.9 million from receipts of sales of Council houses that the government are due to release to the borough. This should be used to begin to build the new council housing needed to house those in most urgent need on the housing waiting list.
The Tories have imposed restrictions on the housebuilding programmes Councils can fund from the sale of their own housing stock! This is the equivalent of forcing an individual to sell their own home and then forcing them to use that money to pay to build a house for someone else. We propose that the Mayor leads a campaign to change these rules to allow Councils to build council housing from the sale of council housing receipts.
We would want the Council to protect this money until this campaign is successful and not allow, In effect the Government to steal this money from. With match funding these receipts could mean a council house building programme in this borough worth £100 million. That could start to have a significant impact on the lives of 20,000 people on the Housing Waiting list in this borough.