Hounslow Council 'Not Close to Bankruptcy'
Council leader says borough in a strong position relative to others
Picture: Cllr Shantanu Rajawat
December 22, 2023
Hounslow Council’s leader has warned that there are tough decisions while offering reassurance that the borough was not close to bankruptcy.
Other London local authorities are warning that, after the latest round of government funding, which provided a 6.1% annual increase, they may need to file a Section 114 notice and revert to delivering only essential services.
However, Cllr Shantanu Rajawat ruled out Hounslow having to do this but has said that a rise in Council Tax next year by the maximum of 4.99% is ‘on the books’ as the way the funding is structured effectively forces the hand of local authorities.
In an interview on BBC Radio London, he said that he was initially optimistic that Michael Gove’s lobbying of the Treasury for more money for local councils would provide a firmer foundation for local government finances but that he was ‘really disappointed with the outcome’ which was announced on Monday (18 December) and it was getting harder and harder each year to balance the books.
However, he said that Hounslow was in a relatively strong position have made ‘difficult decisions early on’.
Local governments have across the country have seen rising costs relating to adult social care, homelessness and special needs education which have put pressures on their budgets leading to a spate of ‘bankruptcies’ of both Labour and Conservative run councils.
Responding to the publication of the provisional Local Government Finance Settlement for 2024-25, London Councils anticipates a continuing funding shortfall of at least £500m – with consequences for local services across the capital.
Cllr Rajawat has said that in Hounslow discussions had been taking place for some time on what services were statutory and could not be cut and those that it was possible to remove funding from. He said he particularly regretted the council’s inability to give youth services the amount which he felt was required.
He called the current system of local government finance as unsustainable and said that it was wrong that authorities were dependent on the ‘regressive’ Council Tax.
Cllr Rajawat, added, “It’s deeply disappointing that the Government has failed to recognise the ongoing strain and increasing demand on council services with the 2024/25 settlement.
“Chronic underfunding for the last 10 years has seen our budgets and services stretched and squeezed. Despite urgent calls to address the skyrocketing costs and financial distress every borough is experiencing, they have failed to listen or recognise the damage done by a wave of reckless policies which have caused a crisis in health, social care, the asylum system and temporary accommodation.
“With rising costs pinching households every penny, Hounslow, like many local authorities, have been shouldering the responsibility to provide the additional support residents need.
“Sadly, the proposed local government funding settlement is calculated on the assumption that London Boroughs will put up council tax by a maximum of 4.99%, which provides more than half of the additional funding in Hounslow’s settlement. If this proposal goes ahead, we will face the stark choice of either putting up council tax or having a significant budget shortfall. Once again, the Government is placing further strain on hard-pressed citizens. “
Cllr Claire Holland, Acting Chair of London Councils, said, “We are deeply concerned 2024 looks set to be another year of massive budget pressures and a continuing squeeze on Londoners’ local services.
“The measures announced by the government fall short of what we need. While the funding deal will bring some relief, it won’t be enough to plug the budget gaps we face and restore stability to town hall finances.”
To hear the full interview with Cllr Rajawat the on BBC Radio London Breakfast show listen here from 10:47.
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