Havering Council on ‘brink of bankruptcy’ after being ‘shortchanged’ by Government

Havering Council has warned it is on the brink of bankruptcy

Havering Council

Havering Council has warned it is on the brink of bankruptcy after being “shortchanged” by the Government.

Council leader Roy Morgon warned on Wednesday that Havering is reaching the point where it has no choice but to push ahead with a Section 114 notice – effectively declaring it bankrupt – or apply for a substantial loan from the Government.

The Government has also told town halls they can increase bills by five per cent in the spring, after warnings that services were stretched to capacity.

But councillor Morgon has warned the increase in funding is a “mere drop in the ocean and goes nowhere near to meet the rapidly rising costs to carry out the services that we must provide by law”.

He said in a statement: “Once again the Government has short-changed local government in the recent finance settlement.

“Havering is on the brink of effectively declaring itself ‘bankrupt’ by issuing what is known as a Section 114 notice because the cost of social care, homelessness and inflation is greater than the money we receive. 

“We have been warning the Government for some time about this, and despite these warnings, they have not helped us deal with this problem.”

Mr Morgon warned that Government funding has been slashed from around £70 million in 2010/11 to under £2 million.

The council leader said Havering has made more than £160 million in savings, plus efficiencies and fee increases over the same period, and has sold a further £160 million in assets to fund its capital programme.

The council is also facing uncertainty and cuts in other grants such as the Household Support Fund.

Mr Morgon added: “Our population has the second oldest population in London and now has one of the fastest children’s populations in the UK, which means our costs with inflation are predicted to be over £45 million next year, yet our grant increase is just a mere £5.6 million.

“The only other solution offered by the Government is for councils who are seeing the most severe financial shortage to increase council tax above the threshold without a referendum.

“We find this insulting as the only reason why most councils are in this position is because of the lack of funding from the Government to deliver social care and homelessness services which we have to do by law.

“We also don’t think it appropriate or fair that council taxpayers should take the burden of these costs, for government failure to deliver on the fair funding review and the use of data that is over 10 years out of date.”

The Department for Levelling Up, Housing and Communities has been contacted for comment.

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