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Update on the Council's financial position

Cllr Amanda De Ryk, Cabinet Member for Finance and Resources, gives an update on the Council’s financial position, further savings to be made and how the Council plans to balance the budget in the future
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Later this month, our select committees will begin the process of scrutinising proposals for a further £1.4m in cuts and savings that the Council will need to make to balance our budget for the year ahead.

Like most councils, we’re finding balancing our budget increasingly challenging, and after more than a decade of government austerity and under-investment in local services; increasing demand for some of our most important and expensive services such as adult social care and support for vulnerable children; as well as the impact of the COVID-19 pandemic, we’re running out of ways to save money.

Since 2010, our revenue grant from government has been cut by over 60%, and despite Council Tax rises we now have an astonishing £450 less per resident to spend on services each year. During that same period, inequalities across the country have widened, so our priority is always to make sure the most vulnerable and those who need us most have access to our services and that every penny we spend makes a real difference in our borough.

Over the years we’ve responded to the budget challenge by finding cheaper ways to do things, cutting back-office staff and prioritising the services that make the biggest impact. However, over 70% of our budget is spent on vital, statutory social care services – leaving us with fewer and fewer options of where and how to make savings.

The additional cuts being proposed include some efficiency savings, which we welcome and will always try to find, but also some cuts that we’d rather not make.

Last month the Government confirmed the annual funding for local councils – while this was referred to as “extra funding”, in reality our revenue grant has increased by just £800,000. To put this into context, so far in 2021/22 we have spent over £25m extra on Covid-19-related spending, and face at least £7m of inflation and tax increases for 2022/23, with inflation still rising each month. We also received a series of additional, one-off payments totalling about £10m. Whilst any extra funding is welcomed, and will help us to balance the books this year, the Government has been clear that this will be one-off funding and not the long-term funding solution councils and other public services desperately need.

This gives us a little breathing room over the next year, before the one-off funding is stripped from our budget. It will allow us to roll out some of the measures we need to take that will help us to save money in the longer term and continue to balance our budget.

In future years we simply won’t have the option to make the sorts of savings we’re making now, because we’ll have exhausted these options. Of course, we’ll continue to lobby the Government for fairer funding for local government – especially for adult and children’s social care – but realistically we’re going to have fundamentally change how we work.

We’ll need to think about which services we can continue to provide and how we deliver them; consider how we work better with partners and local organisations and think about how we best use our buildings and other resources. We need to consider our borough’s changing needs and how people want to access our services.

We can already see some of this approach being adopted by our Adult Social Care teams. They are embarking on an ambitious new way of working that will improve outcomes for residents by supporting them more intensively at an earlier stage. Short-term investment in enablement improves outcomes for the people we support because it allows them to stay in their homes and live independently for longer. It saves money in the long term, but it’s also just the right thing to do.

We’ll also continue to look at how we can attract investment into the borough and make sure we continue to secure external partnership funding, as we are doing to fund our Borough of Culture programme.

This will be a huge piece of work and we don’t underestimate that, but we’re ambitious for Lewisham.

My councillor colleagues, the Council’s leadership team and staff at all levels are passionate about our borough and we are determined to make sure we continue to provide the services our borough needs.

To find out more about the Council’s financial position and next round of savings being proposed read our Budget Reductions Report.

The facts

• Our budget has been hit by government cuts, the impact of Covid-19, rising costs and ever-increasing demand for our services, due in part to our population increasing by 12% since 2011

• Since 2010, our revenue grant from government has been cut by over 60%, and despite Council Tax rises we now have an astonishing £450 less per resident to spend on services.

• Over 70% of our budget is spent on supporting our most vulnerable residents through Children’s Social Care, Adult Social Care, and public health services

• Nine out of 10 councils overspent on their children’s services in 2019

• Less than 30% of our budget is available for services like parks, libraries, leisure centres, street cleaning, and waste and recycling

• Covid-19-related pressures continue: running to approximately £33m in this financial year

• Inflation is currently 5.1% and creating pressure on contract prices and wages

• The Council has already identified a further £10.4m in cuts and savings to be made in 2022/23

• Further savings of £1.4m need to be found in 2022/23 as a result of ongoing demand for services

• Recent government announcements about funding do not go far enough; in the provisional settlement our revenue grant will be increased by around £800,000 – other increases are only one-off grant payments so, while helpful for 2022/23, cannot be relied on

We will:

• Continue to lobby Government for a fairer funding deal for local government

• Prioritise our services and funding where they are needed most

• Work closely with our partners, local organisations and residents to make sure we are delivering services in the most effective ways

• Involve service users in changes or the redesigning of services

• Work hard to attract external and partner funding where possible and bring investment into our borough

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