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The biggest challenge we've ever faced

At a meeting of Lambeth’s Cabinet last Monday (7th December), we agreed the December Financial Planning Report, which sets out the financial challenge the Council faces over the next four years.

It was a sobering report that paints a stark message for local government and Lambeth, following the Conservative Government’s Spending Review last month.

Despite increased tax revenues indicating a better picture for the public finances than in recent years, it is clear that this Tory Government is committed to an ideological agenda of a ‘smaller state’, and is determined to reduce current spending on public services from 42% of GDP to 36% by 2020.

Given they are nominally protecting certain areas, such as the NHS, defence and overseas aid, the Tory axe falls heaviest on areas like local government, and hardest of all on poorer areas like Lambeth. 

The scale of this financial situation is unprecedented and the biggest challenge this local authority has ever faced. The headlines for Lambeth are therefore a confirmation of our worst projections in the July Finance Report, namely:

  • A 56% cut in core funding from Government; which ignores inflation and increasing demand;
  • The transfer of future funding risks from central Government to local government, such as business rates, breaking the link with ‘needs’ based funding to address social deprivation; 
  • Further cuts of up to £100m by 2018/19, bringing total cuts of over £238m a year since 2010.   

This Government’s attitude to local government spending fails to recognise the reality for the services we deliver. We have huge budget pressures caused by demand; for example, increased homelessness in the capital means we have spent £11 million on temporary accommodation this year, when our budget was originally £6 million. We will always support and help those most in need; but the Government doesn’t give us the extra £5 million so we have to find it from elsewhere in our budget.

We also have a crisis in social care, with a Government that has slashed its funding, putting huge pressure on the NHS. Allowing a 2% ‘precept’ on Council Tax ring fenced to adult social care is the Government’s apparent solution. Yet that would only raise £1.9m a year, less than 1/10th of the £20m gap in this area. That simply won’t be anywhere near enough to help us provide the care our residents deserve.

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Since the Second World War, local government funding has been determined by providing more for those areas with the highest needs, such as deprivation and large numbers of elderly or disabled people. This Government wants to abolish that principle, removing all core funding to local government and leaving us solely funded by business rates and council tax. Currently these make-up only 2/3rd of our funding and our calculations show a £20m to £30m hole in our budget when this is introduced in 2020, with no answer from the Government about how that can be filled.  

As a Labour administration, we have and will continue to point out to residents that the Government’s ideological attack on local government is not what we want and not what residents deserve.   They clearly want councils to take the blame for their cuts to public services, and we will fight this while doing what we can to protect public services locally, as best we can.  

We’ve lost 56% of our funding from 2010 to 2018. As 50% of our budget already goes on supporting vulnerable adults and children, it means we have no option but to find savings in our other services. This is an extremely harsh reality. But we in Lambeth are driven by our Labour values underpinned by a commitment to ambition and fairness for all.  We will continue to fight this Government and support the residents who put their faith in us in 2014.

Cllr Paul McGlone

Deputy Leader, Finance and Investment

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