Finances 'on solid ground' but four per cent council tax hike is coming, Newham cabinet chief says
PUBLISHED: 12:36 22 January 2020 | UPDATED: 12:36 22 January 2020
The borough's finances are now "on solid ground" but a four per cent hike in council tax is needed in the face of more government cuts, a meeting heard.
Cllr Terry Paul signalled during a "state of the borough" themed public meeting at Old Town Hall, Stratford, on Monday, January 20 that he would be asking members to approve the rise.
"Without stable finances we cannot protect our services and respond to the challenges of the climate emergency," Cllr Paul added.
In his update, Cllr Paul explained people are now paying £3.5million less each year in interest on lender option borrower option - known as LOBO loans - after Newham's negotiations.
A LOBO loan is a long-term loan of 40 to 70 years. The interest rate is fixed at first, but the lender has an "option" to propose or impose a new fixed rate.
In May 2019 Newham struck a deal with NatWest bank over its LOBO loans, saving about £150m. The agreement allows the council to pay off the loans at a lower interest rating, saving the equivalent of £3.5m per year over 41 years, the length of time the loans still have to run.
Due to government cuts, the council needs to save £45m by March 2023. Savings of £36.2m have been identified which - combined with £9.6m extra income from the proposed council tax increase over each of the three years - are expected to achieve this.
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Newham froze council tax from 10 years from 2008/09 to 2028/19. If council tax had been increased by the maximum amount available in each of those years, Newham calculates it would have collected £82m.
But Cllr Paul said: "Our finances are now on solid ground. We are putting residents at the heart of everything we do."
Councillors next discussed a "snapshot" report outlining where the borough is at as the council starts the next decade. This included details of a community wealth building scheme aimed at reducing poverty.
Mayor Rokhsana Fiaz said: "We live in an exciting, vibrant part of London. We continue to have one of the youngest and most diverse populations anywhere in the country.
"This positive potential is something we must harness in the years to come."
Health, education, housing, finances, safety, children and youth services, democratic participation, adult social care and the climate emergency are among the priorities.
Cllrs Neil Wilson, John Whitworth and Susan Masters welcomed the report, but questioned what could be done to enhance spaces for small to mid-sized businesses, encourage cooperative enterprises and develop residents' skills respectively.
Ms Fiaz said work would be done to make sure people, communities and businesses flourish right across the borough.
Final decisions on draft budget proposals will be made at a council meeting on March 2. View the full proposals at newham.gov.uk/budget