The Deal – £25m From Government In Exchange For £13m Cuts And 10% Rise In Council TaxPosted: February 13, 2002 Filed under: Hackney Council, ITnet, Privatisation / Sell Offs Comments Off on The Deal – £25m From Government In Exchange For £13m Cuts And 10% Rise In Council Tax
In response to the three-year budget strategy provided by Hackney Council last year, central government is to give the local authority £25m to reduce the impact of the cuts. The ‘deal’ still requires £13m worth of cuts and a 10% increase in council tax. Not much of a deal for Hackney residents who will be paying more whilst simultaneously watching their public services disappear.
How to balance the budget – whatever the social cost
After an audit commission report in 1999, huge gaps in the authority’s finances were exposed and central government demand-ed changes to the running of the council. The first step it took was to prevent a single penny from being spent, by serving a Section 114, an inadequate policy which saw waste vehicles sit idol in the depot waiting for repair as rubbish piled up on the streets. The ensuing protests forced the order to be lifted, but only after the council agreed to formulate a three- year budget balancing strategy. The government paid £3.5m to accountants whose task was to go through each department’s finances looking at ways to make savings.
When the strategy was publicly aired in December last year, there was outrage – no area within reach of the council was safe as group after group and service after service faced huge reductions in their finances. Many residents most in need, the young, elderly and those from minority communities, will lose vital facilities.
The budget strategy requires the government to give Hackney £54m over 3 years. However, it has now been made clear the only one year’s worth of extra funding will be offered. Will the future see even worse cuts imposed than those already outlined in the 3 year budget?
Drop the Debt!
The Government may wish to shift all the blame onto Hackney Council but a major part of the problem is the massive debt repayments the Council has to make to the Government – nearly £75 million each year. If it did not have to pay this it would not have to take the short-sighted step of selling off its family silver, in the form of buildings and land. The facilities that occupy these, such as libraries and play-grounds, are under constant threat of disappearing. The District Auditor has warned that property disposal ‘is not a sustainable medium-term strategy’ while, at the same time, asking for ‘clear actions and timescales to show how the gap (in future budgets) is to be addressed’.
Government-encouraged privatisation has also added to Hackney’s debt. The outsourcing of benefits and council tax to the company ITNET cost the borough £38m when the deal went sour. ITNET meanwhile announced a pre-tax profit for the year of £12.5m. Outsourcing of abandoned vehicles collection is intended although £130,000 of the Neighbourhood Renewal Fund is to be used on it until that happens. And privatisation of Waste Management now seems likely to cost more than when it was in the hands of the council.
The Government claims that the £25m is ‘an exceptional offer of support to prevent unacceptable cuts in services’. Yet £13m cuts are totally unacceptable and more will be scheduled for next year. The Government has provided stringent conditions attached to the money. At least £10m must be made available for future years and so is not available for services at all.
Once again the people of Hackney are left dangling on a thread wondering about the future of their community and what next year’s budget will bring.
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