Greenwich Council will have to make £30 million of cuts this year – with the risk that thousands of the borough’s poorest residents will lose their exemption from council tax in the years ahead.
The borough’s cabinet member for inclusive economy, business and skills, Mariam Lolovar, delivered the warning at Wednesday night’s council meeting as the town hall began the process of setting next year’s council tax rates.
No details have been announced of what the rise will be, although other councils are already planning 4.99 per cent hikes with Greenwich likely to follow suit.
Those with second homes in the borough will pay double council tax next year, but Greenwich is also reviewing its council tax support scheme, which gives a 100 per cent discount to about 14,750 people on low or no income.
Lolovar said a lack of government funding was putting the council in “an awful situation”.
“The financial situation for councils is dire,” she said. “It’s, as I and others have said, the worst they’ve ever seen. The government settlement was nowhere near enough and we are left with a legal responsibility to balance the budget. We are looking to make in the region of over £30 million worth of cuts.”
The opposition Conservative leader, Matt Hartley, tried to pass an amendment to stop the review of the support scheme, saying he had tried to persuade the Labour party to introduce the scheme in 2018 and 2019 before it was introduced in 2020.
“That decision lifted up to 15,000 people on the lowest incomes in our borough out of council tax altogether. It has also dealt with the problem where the council was instructing bailiffs to try and enforce debts against a group of people that the council itself had already identified as vulnerable,” he said.
“It was introduced at a gross cost of £1.3 million a year at the time. The net cost has been lower because of the impact of lower collection costs from avoiding the futile and harmful process of trying to collect council tax debts from people on the lowest incomes who are never going to be able to pay it.”
“I do understand why officers have made this recommendation, but ultimately it’s a political decision. I think the political decision tonight that we should take together is to take this option off the table.”
Lolovar said the scale of the council’s financial problems meant that “we have to look at everything” when it came to making cuts.
“The most important thing here is that we are also not alone,” she said. “Councils across London and across the UK are struggling to balance their books and they are also equally also looking to consult on their [council tax support[ schemes.”
“It is not the situation that we want to be in, and it is one that I hugely regret that we have been forced into. If only we were being funded to do the role that we should be doing. But every day as councillors and as officers, we’re just having to cut, cut and cut.
“I believe in a state, and I believe in local government, and I think that is the inherent difference here, is that this government doesn’t. It does not believe in a state and it does not believe in local government. Otherwise it would pay it fairly and then we would not have to be taking these decisions.”
Anthony Okereke, the council leader, said the review would was “just a consultation and not a decision at this moment in time”.
He said that the council needed certainty on how much money it would have in the future, and added that it had taken 40 Tory MPs writing to the government for it to come up with some extra cash for councils.
Growing social care and housing costs, together with a lack of central government funding, have led to a major crisis for local government.
Last year Greenwich revealed that it was spending £1.8 million a month on hotels for families who needed housing, with £800,000 of that being spent at Travelodge branches because of a lack of other suitable accommodation.
BBC analysis that was released last month and shared with The Greenwich Wire showed that councils across the UK had £98.4 billion of debt.
Greenwich owed £397 million — £1,373 for every resident — while Lewisham’s debts were £197 million and Bexley owed £223 million.
The most-indebted borough in London was Croydon, which owed £1.1 billion and has effectively declared bankruptcy. Two other councils — Enfield and Barking & Dagenham — also had debts of over £1 billion.