Lambeth Council’s Medium Term Financial Strategy paints an uncertain future for local government finance where, after the initial public health response and economic measures taken to support local business and the voluntary sector in Lambeth following national restrictions in March 2020, the full effects of the pandemic are still to be entirely felt.
Developments including the emergence of new Variants of Concern (VoC), the ending of the furlough scheme along with uncertainty about the future of central government support and the national management of the pandemic have meant that the impact on grant funding for essential public services and income sources for local government is bleak.
The existing pressures placed on the council’s services, in areas such as temporary accommodation, homelessness prevention, and the increasing demand and costs of social care, have been added to by the pandemic and the government restrictions that have been put in place over the past 16 months.
The report, presented to the council’s Cabinet at its meeting on Monday 5th July 20201, spelt out the continued uncertainty around how local government will be funded in the future, with the Fair Funding review still under consideration, the delayed Business Rates Retention policy which will aim to remove the Revenue Support Grant from central government amid a so-called ‘re-set’ of Business Rates likely to reduce funding from 2023/24.
In addition to year-on-year reductions in funding since 2010 from central government, Council Tax and Business Rates will have to play a greater role in ensuring the council stays on a sustainable financial footing and is able to continue delivering services for its residents. This reliance on tax income generated from households and businesses means that the council is increasingly reliant on the local economy getting back up and running and our residents having secure and well-paid jobs. This is supported in the council’s Skills and Employment strategy through which Lambeth is putting a sustainable economic recovery and climate crisis response at the centre of its work.
Locally, the council has played its part in supporting the local economy with a targeted Economic Resilience Fund package aimed to keep the businesses most impacted by the pandemic afloat so they can come back stronger once the economy opens. Council Tax has also had to be increased to fund services and the Covid-19 recovery. In recognition of this reliance upon Council Tax, the council has expanded the support available for residents in financial difficulty, so that more people can receive the support they need. However, this action to help residents will impact on the Council Tax base.
Lambeth Council has expanded support for vulnerable people who struggle to pay their Council Tax by increasing the scope and funding for our Council Tax Support scheme through use of the Hardship Support Grant. This extra £1.5m of hardship support will reduce the bills of almost 7,000 households eligible for Council Tax Support, with most of those seeing their bill reduced to nil.
As rises in Council Tax become a more significant factor in providing additional resource to local councils, Lambeth has begun consultation to make a permanent adjustment to the Council Tax Support scheme for 2022/23 to protect more residents who find the increases in Council Tax unaffordable.
The Covid-19 crisis has had – and will continue to have – a significant financial impact and will continue to inflict a negative long-term effect on the level of resources available to the council. Lambeth’s financial strategy will be continually developed so that it underpins and supports the delivery of Lambeth’s priorities of supporting the local economy, sustainable growth, and development, increasing community resilience, promoting care, independence, and equality strengthening diversity and delivering inclusion for all the borough’s communities.
Word from the Cabinet
Cllr Andy Wilson, Lambeth’s Cabinet Member for Finance and Performance, said:
“For local government, despite the great upheaval and change the last 16 months have brought, there are some things which have remained familiar. Yet again, we are planning for our financial future in a state of continued uncertainty – not simply with the progress and outcome of the pandemic and Brexit, but with the future of local government finance and the long-term funding pressures of essential services.
“After a decade and counting of government cuts to council funding, we have sought as best we can to do what is needed during the pandemic and will continue do so in the future by supporting our communities and local economy, delivering a recovery that works for everyone.
“We know that many of our most vulnerable residents will have suffered a loss of work or change in economic situation, increased caring responsibilities or an increased pressure on their household due to sickness, self-isolation or the effects of lockdown measures.
“That’s why, as an administration committed to helping the most vulnerable, we’ve expanded the welfare safety net for people in financial difficulty so that more people can receive the support they need, with millions invested in emergency assistance, housing payments, council tax support, hardship support grant, and advice services.”