London Hit by "Hackney Tax"Posted: February 19, 2001
Londoners have been hit by a “Hackney tax” following the borough’s collapse into financial chaos, it emerged today. Figures released by the Mayor reveal that the disastrous state of council tax collection the east London borough caused an increase in his precept – the slice of council tax allocated to the Mayor – of an additional one per cent. The London Assembly yesterday voted to allow him to raise the precept by 22.6 per cent. The Mayor has promised to use the extra money to pay for 1050 extra police officers and to fund developments in technology and staffing in the Met. Last year the borough estimated that it expected to collect 96 per cent of the £54 million it could levy in council tax. But its performance has been much worse. The borough is on course to collect just 68 per cent, which means it will be £15 million short. This has in turned impacted upon the “council tax fund”, a pool of reserves resulting from surpluses made by all of the London boroughs.
GLA officials calculated they would receive £2.3 million from the fund and would not have to raise so much through the precept. But after the Hackney crisis, the GLA was instead forced to pay £700,000 into the fund. The Mayor compensated by raising his demand on the precept.
The revelation is embarrassing for the GLA’s deputy Tory leader Eric Ollerenshaw, who is also joint leader of Hackney council. In a statement with Cllr Jules Pipe, who chairs the borough’s finance committee, he blamed the low level of council tax collection on a contractor. “We want to ensure every penny is paid so we have funds to run services. However, given the problems caused last year we do not pretend that this will be easy.” But they said Hackney should not be blamed for the scale of the increase. “While our council tax collection does have a small effect on the overall precept, this is in no way comparable to the large increases to the precept proposed by the Mayor.”