Comment

Cllr Nick da Costa: ‘Labour seems determined to make costly decisions’

Nick da Costa, who represents the Highgate ward, on the financial strain Haringey Council is under

Council finances have hit the headlines in the past couple of weeks with the news that Birmingham City Council has declared itself essentially bankrupt (local authorities can’t declare insolvency like a business, but issue a Section 114 notice, which restricts all new spending beyond the barest essentials). As the nation’s second city, this hit national news, but Birmingham is far from the first local authority to go under. Northamptonshire went bust back in 2018, and in the past couple of years we have also seen declarations of effective bankruptcy from Slough, Thurrock, Croydon, Northumberland and Woking.

Much has been made of the cuts made by central government to areas like health and education, but in real terms councils have suffered far more. The Conservatives think they can get away with this as cuts to councils have far less emotional sway than those to schools or the NHS, but the reality is that these cuts have caused huge problems.

Most people think of the council as collecting the bins and repairing potholes, but the vital services run by local authorities stretch far beyond this. The vast majority of the budget is spent on social care, an area where demand
has exploded in recent years. National politicians often pay lip service to the importance of social care, but their actions do not back this up. Even as demand has risen, budgets have had to be cut, leaving councils struggling to meet their obligations. These factors have led many, many councils to teeter on the edge of bankruptcy, with those who have either made a costly and poorly thought through decision or those hit by another outside factor the ones who have fallen off the cliff edge.

Haringey is not yet in immediate danger of bankruptcy, but the Labour administration seems determined to make one of those costly and poorly thought through decisions. After failing to invest in schools, roads, and housing for decades, the council leadership has decided that now, just after the spike in interest rates, is the time to borrow millions of pounds to spend on upgrades. Many of these projects are worthy (though Labour’s insistence on a multi-million pound renovation of the council’s own offices is not), but add them all up and Haringey is left in an extremely dangerous position. The interest we paid on our borrowing rose from £3million in 2018/19 to £13m this year, and is forecast to continue to rise to £38m by 2027/28. To put these figures in some sort of context, a 1% increase in council tax increases the council’s budget by just over £1m.

And, if we are forced to issue a Section 114 notice, the consequences for residents will not be trivial. In Croydon, the government authorised an enormous 15% rise in council tax, whilst residents in Thurrock will see costs for burials and interring ashes rise by 9%, and residents wanting a third visitor permit will see it quintuple in cost. Meanwhile, the council will be banned from spending money on any service not arbitrarily deemed ‘essential’ by central government. This would not, for example, include replacing Raac concrete in schools and other public buildings.

We cannot allow our borough to get into that sort of position, where we are putting children’s lives on the line.
It is clear that the council is hoping that the Conservative government is swept out of power and that whoever replaces them will give councils a fairer funding settlement. I share that hope, but we cannot risk taxpayers’ money on a wing and a prayer.

Haringey needs to create a robust plan to deal with its spiralling interest payments, and, if it is unable, we will need to review which projects are most important and which are not possible to undertake at this time.


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