The City of London Corporation is proposing putting aside £400,000 for ‘possible increases to members allowance’ while hiking council tax and social rents. The Corporation’s Finance Committee met earlier today (February 20) to agree a series of budgetary measures for the year ahead, prior to them going to the Court of Common Council in March for final approval.
A report compiled ahead of the committee meeting warned the Corporation is facing major pressures if it is to continue proposing settled budgets into the future, due to issues such as increasing inflation, reductions in property income and rising demands in adult and children’s services.
Members agreed actions including upping council tax and the Adult Social Care precept by a combined 4.99%, and business rate premiums of up to £0.04 in the pound in a bid to better the Corporation’s City Fund finances.
Without the above measures, over the current five-year period the Corporation is projecting an overall surplus of £10.1m thanks to healthy balance sheets for 2023/24 and 2024/25. However, a deficit is expected for each of the following three years, with the largest in 2027/28 at £33.6m. If the City of London Police funding is also rolled in, the five years from 2023/24 to 2027/28 will see the Corporation down by almost £6m.
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This situation is improved if, as expected, the recommended actions are granted final approval by the Court of Common Council next month. Though as noted in the report, “the medium-term clearly highlights City Fund finances including Police remain challenging with the significant deficits forecast across the remainder of the medium-term financial plan”.
During the meeting, Chairman of the committee, Deputy Henry Colthurst, said it would be ‘simply unacceptable’ for the Corporation to ever issue a Section 114, which declares effective bankruptcy. “We must as a membership face reality, but not be daunted,” he added. “We are still in a really stretching situation in both these funds and along with that we must look longer term.”
The proposed 2% rise for Adult Social Care is expected to deliver an additional £165,000, helping address £310,000 of pressure within the service, while the 2.99% council tax hike would bring in £247,000 extra per year.
Even if such increases are implemented, City of London residents would continue to pay among the lowest council tax rates in the capital. A Band D property would be liable for £1,051.62 a year excluding the Greater London Authority (GLA) precept. This is more than Wandsworth’s £961, which admittedly includes the proposed GLA precept, but far below the likes of Havering and Brent, two of the councils to break the £2,000 barrier.
The report also details the huge pressures faced due to the Corporation’s capital programme. These include the Cyclical Works Programme (CWP), essentially the ongoing maintenance of the Corporation’s buildings, and the Barbican Centre works, the overall cost of which is now expected to be £451m over the next 20/25 years.
The above budgetary concerns all relate to the Corporation’s City Fund. This is just one of its sources of income, and is used to cover its local authority, police authority and port health authority activities.
Committee members also agreed recommendations including a 7.7% increase in social rents for the year ahead, to assist in balancing the Housing Revenue Account (HRA). This situation is expected to improve in the next few years as additional developments are completed.
Among the other items given the green light was a £400,000 provision for ‘possible increases to members allowance’. Deputy Elizabeth King said the committee needs to think ‘very, very carefully’ about such a move at a time when the Corporation is looking at hiking social rents. “The optics of that, if nothing else, are dreadful,” she said. Any potential increases would be subject to recommendation from the Civic Affairs Committee, the report adds.
The recommendations will now go to the Court of Common Council for final approval on March 7.
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