Council leader Ray Morgon. (Credit: LDRS)
(Written by Local Democracy Reporter, Sebastian Mann)
The East London authority is one of several across the country battling to stay afloat, after declaring effective bankruptcy in February.
It was offered a loan of £53.7million by the former government in March to save it from collapse, which it would need to pay back over the next two decades.
Various conditions were attached, and Whitehall has said it will want to see proof the council is making savings where it can.
Over the past 14 years, the council has made around £160m in cuts, leader Ray Morgon said. It has also sold public assets and plans to convert car parks into housing blocks have been discussed.
The most controversial proposal has been the closure of four of the borough’s ten libraries.
Almost 5,000 people participated in the council’s public consultation, which the leader said was the highest response rate he had seen, and protests have been organised outside the town hall.
He told the Local Democracy Reporting Service (LDRS): “Closing libraries obviously isn’t something we would want to do, but it may be a necessity.”
Cllr Morgon stressed that no decision had yet been made and the cabinet would review its options before proceeding.
The leader added: “If governments want us to provide statutory services, such as libraries, they must provide us with adequate funding to do so.”
The closures will save around £300,000 but critics have said the impact on the community would outweigh the financial benefits.
Cllr Morgon said: “In the grand scheme of things, that is relatively small. But it all adds up – and we have to demonstrate to the government we are making savings.”
Gabby Lawler, the Havering branch secretary for trade union Unison, said the closures would have a “detrimental impact on the poorest and most vulnerable” in Havering.
Councillor Keith Prince, leader of the Havering Conservative group, said the prospect “should never have come up”.
But during a recent full council meeting, Graham Williamson, cabinet member for regeneration, said: “If we don’t make savings, you won’t get anything else again.”
The council is yet to draw from the loan, but has put £32.5m aside for the current financial year.
However, Cllr Morgon said it could end up overshooting that as the cost of public services and housing “are increasing all the time”.
The biggest pressures on Havering Council’s finances are social care and housing, after 14 years of “systematic” cuts to funding.
Due to the rising cost of housing in the borough, echoed across London, the council has been paying for residents to stay in expensive hotels and other bed-and-breakfast style accommodation.
It has also found itself juggling unique social commitments, as the borough is home to the second-largest elderly population in London and the fourth-fastest growing children’s population in the UK.
Though the council has not yet borrowed any money, Cllr Morgon said it likely will “at some stage”. In the coming weeks, the leadership cabinet will be reviewing its coffers to determine where it may need to apply for a loan.
In a letter to the council, the government said the money will be loaned at the rate set by the Public Works Loan Board plus 1%.
Based on initial calculations, that would equate to an extra £2.13m being paid out over the next 20 years.
Cllr Morgon told the LDRS: “We’re hearing from [Chancellor of the Exchequer] Rachel Reeves that she has a £22bn budget gap to fill, so we don’t know much local governments are going to be offered.
“But I think they appreciate that the austerity and the cuts we’ve had since 2010 have damaged public services.
“They’re saying ‘no more austerity,’ but what does that mean in reality? If public services are going to be better financed, where is the money going to come from?
“There’s a lot of uncertainty around it, but I’d like to think that when the Budget is out of the way [on 30th October], we’ll have a better idea of where we are.”
In August, the council leader wrote to Housing Secretary Angela Rayner to outline the authority’s financial position and get a “better understanding” of the government’s position, but has still not heard back.
Havering Residents Association, which controls the council, functions as an independent political organisation and is not aligned with a mainstream political party.
Cllr Morgon said he has not been treating the new Labour government any differently to the Tories, adding: “You just have to deal with whoever’s in power at the time.”
Elsewhere, early proposals have been put forward to build a £200m data centre in the east, which developers say would be the largest in Europe.
The council is also pushing to ‘revitalise’ neighbourhoods like Romford and Harold Hill, in a bid to stimulate the economy and attract businesses from both the capital and Essex.
