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Harrow Council Unveils Budget: No direct cuts to frontline services, but tax hike looms

Harrow Council claims next year’s budget will see ‘no direct frontline cuts’ to services but residents will see a tax hike and staff face job losses. The Labour opposition has accused Conservative run council of ‘breaking a promise’ they made to freeze taxes for residents.

The budget, which will shape how the council spends taxpayers’ money next year, was brought before councillors at a meeting yesterday evening (February 22). As is the case with many London boroughs, Harrow residents face a 4.99 per cent rise in council tax – which will come into force at the end of April.

To deliver a balanced budget, Harrow has had to use £5.8m from earmarked reserves but the leadership has assured residents that frontline services won’t be cut. Instead, the council claims it has made savings by making use of new technology and more training to make the operation run more efficiently.

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Cllr Osborn, said: “That has its issues because you are losing capacity in your senior management but by doing this we are getting a better structure that will enable us to deliver services. But it is a leaner structure and that has its own challenges.”

He added: “[…] we have a massive back-log in road maintenance that we are trying to address, that’s over £100m backlog in our infrastructure, we need to improve our street cleaning. There’s lots of things we need to do but this budget doesn’t have any direct, frontline cuts.”

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Despite core services largely not being impacted, the reality of the financial situation at the moment is the funding for some projects currently supported by the council will no longer be available and departments face staffing cuts.

Adult Social Care is ‘broken’

Whilst Cllr Osborn noted that Harrow’s finances are manageable for the next few years, he warned that the spiralling costs of adult social care will be a huge challenge for local government moving forwards. Inflation, an ageing population, and increased demand has put enormous strain on the sector.

The Conservative leader described adult social care in the country as ‘broken’ and called for an independent enquiry to tackle the ‘growing pressure’ it is having on local government finances.

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He suggested that a national social care programme – similar to the NHS – could take the responsibility of adult social care away from council’s and free up funds. He claims this could cut council tax rates by ‘more than half’ in Harrow.

Cllr Osborn told the Local Democracy Reporting Service (LDRS): “Whatever you do will have a long-term benefit but a short-term pain and government’s haven’t seen it as a priority. If it doesn’t happen and it isn’t fixed then eventually council’s will only be spending their budget on adult and children’s care and there will be no money for libraries, street cleaning, and bin services would be difficult to deliver.”

Part of the problem is council’s are still in the dark about what, if any, adult social care grants will arrive from central government. In order to balance the books for the next financial year, Harrow claims it has been working under the assumption that, ‘given the pressure local government is under’, the support will continue.

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Cllr Osborn believes local government funding is ‘not in a good place’ and stopping this grant would result in ‘a whole load of council’s suddenly declaring bankruptcy’. He said: “That would be such a catastrophic thing for the entire local government sector that I can’t see a government not doing that.”

He added: “But it’s a risk that we have that they could stop that and suddenly there’s a £6m gap, that’s equivalent to a five per cent rise in council tax to cover that funding.” Cllr Osborn suggested a ‘royal commission’ could find a solution to the issue away from party politics but in the meantime has publicly called for the government to issue multi-year settlements so councils can commit to longer-term plans.

Council Tax rises

Of the 4.99 per cent council tax increase – the maximum amount allowed without a referendum – two per cent is made up of the adult social care precept. A consultation carried out by the council revealed that the majority of respondents understood the need for greater spending on adult services, but 60 per cent disagreed with the tax rises.

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Cllr Osborn said: “Part of the issue is most people in Harrow don’t need adult social care and they don’t need children’s services. We probably have about 6,000 people that use those services out of a population of 250,000, but 66 per cent of our budget goes on those two things.”

He added: “People think, understandably, that they pay their council tax to clean the streets and to empty the bins. The reality is, two thirds of it is spent on those 6,000 people. A placement in a special needs school costs the council £70,000 per child.

“That’s why we have made an effort to do things, such as having an hour free parking and having a free bulky waste collection, to try and recognise that people do pay a high level of council tax and we try to give us much value for money for that as we can.”

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Council taxes currently make up around 80 per cent of all of the council’s revenue. The latest rise will  mean the average Band D household will pay £1,814.92 from the next financial year.

This increase is set to generate an additional £7.8m, according to council figures. However, this will largely be eaten up by pay rises to council employees, which will increase by £7.2m, following the national pay award settlement.

Budgets being ‘squeezed’

Inflation, a growing demand for services, and cuts to central government grants have meant council budgets have been squeezed hard over the past decade. The portfolio holder for finance, Cllr David Ashton, highlights how challenging it is to deliver a budget against this backdrop of uncertainty.

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He told the LDRS: “It’s very difficult. Imagine doing your home budget where you weren’t sure what your income was and you weren’t sure what your costs were. We have a very sober approach. We look at things realistically and we are very careful with the money. […] One person moving in or out of the borough can affect the budget by hundreds of thousands of pounds.”

He added: “There’s a limit on how efficient you can be. You squeeze and squeeze and squeeze but ultimately things will start to cost more money and where does it come from?”

Over the past ten years, central government has cut the council’s Revenue Support Grant from £50.5m to just £2.2m. Although other grants have since been introduced, such as the top-up and public health grants, it still falls short of what council’s previously received. This means local authorities are facing an uphill battle to continue delivering services despite there being less money available and a greater demand.

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Cllr Osborn said: “It’s not quite as drastic otherwise we would have long gone bankrupt, but it’s still less than it was. It would mean that the council tax would be lower, it might have meant we could be spending more on certain areas, such as enforcement.”

‘Cost avoidance strategy’

To balance the budget, the council hasn’t had to dip into the general reserve funds, which currently sits at around £20m, and has outlined a plan to improve service performance without needing to increase council taxes, through a ‘cost avoidance’ strategy. This has already been used to improve the collection service for 180,000 bins each month.

Cllr Osborn said: “If you take the waste service, the problem there […] isn’t money, it’s that the IT system they were using wasn’t working properly, it wasn’t being used properly, they were relying on paper-based systems, and the technology wasn’t being used.”

Another way the council are looking to achieve this is by building a new special needs school in the borough, which could reduce placement costs by around half, from £70,000 per placement to £35,000. It is also looking into a house buying programme to stop the large sums of money being used for temporary accommodation in hotels and Bed and Breakfasts, as well as adopting an ‘early intervention model’ for troubled children.

Cllr Osborn said: “Hopefully in children’s services, the early intervention model that we adopted and are moving to with family hubs will help deal with the problems before they become bigger. It’s cost avoidance, if you deal with a problem earlier on then you’re not having to take a child into care or not having to have a child protection plan or having to rehome someone. Hopefully that will reduce the costs in the longer term.”

The costs of fees and charges are also set to go up for residents as the budget reveals revenue increases of £400,000 – £100k of which will come from garden waste subscriptions rising from £65 to £69. Cllr Osborn puts most of this down to inflation. He added: “Our garden waste is one of the cheapest in London, most charge considerably more than us. If we had more money I wouldn‘t be charging for that service.”

Household Support Fund

Thousands of Harrow residents have also been benefiting from grants made available to local council’s by central government, such as the Household Support Fund (HSF), energy support grant and food vouchers. However, the HSF expires on March 31 and it has not yet been announced whether this will continue, potentially impacting both residents and some community projects.

One such project is the award-winning London Community Kitchen, which helps feed thousands of people every month. It currently receives money from the council, via the HSF, meaning the future funding of the project remains unclear. Cllr Osborn said :”We are optimistic that they will be having some service but it just might not be the same.”

He added: “It looks like [HSF] is not continuing. We have not been told either way […] and that does fund some programmes that we do. There’s a number of things the council still does and will continue to do but some things we did that were simply funded through the HSF we will struggle to continue.

“At some stage [the HSF] has got to end but I’m not convinced that this year is the year it should end. I think it should probably have another final year.”

Future priorities 

If the council is expected to continue delivering the services it does then more money from central government ‘needs to be a part of the solution’, according to Cllr Osborn. Moving forward he wants to get a grip on finances beyond next year so the council can ‘start to plan and make proper improvements.”

He said: “It’s going to be tough. I want to fix more roads than I’m currently fixing, I want the streets to be cleaned more regularly than they currently are, there’s a whole load of things I would like to do that we are not able to do.”

In response to the budget, the leader of Harrow Labour, Cllr David Perry, accused the Conservative administration of ‘breaking a major recent promise to freeze council tax’ and blamed central government for the spiralling cost-of-living.

Cllr Perry told the LDRS: “The budget is being balanced off the back of cutting the number of social care workers supporting our most vulnerable adults and children in our borough along with various proposals to increase the amount of local fixed penalty notices from Harrow motorists totalling an additional £1.5m on current levels.”

He added: “The inflationary pressures facing the council from failed government economic policy is having a detrimental impact, this is directly leading to the significant council tax increases and rent increases to local tenants.”

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