Newham quizzed over £9m drop in rainy day fund due to Covid

scrutiny meeting screenshot

Members of the borough's overview and scrutiny committee quiz Cllr Terry Paul and finance director Conrad Hall on Newham's reserves. - Credit: LBN

A £9million drop in a rainy day pot has prompted questions about the town hall's coffers.

Newham Council will have £4m in its general fund reserve after this financial year due to the impact of the Covid-19 pandemic - down from £13,200,000 in March 2020.

Cllr Ken Clark asked a meeting of the council's watchdog overview and scrutiny committee on Wednesday, February 17 how dangerous it was to have just £4m left.

Conrad Hall, Newham's corporate director of resources, said it was important to consider not just reserve levels but how much was being paid in.

Mr Hall told the committee £3m would be paid into the pot annually and the reserve would be back to pre-pandemic levels in three years.

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But he acknowledged risks remained which could result in driving down reserve levels, including a fourth wave of Covid-19.

"Ordinary" overspending, which Mr Hall said included the local authority's department managers not being "up to the task" of making agreed savings, could also pose a risk.

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Mr Hall described the risks as "manageable" and his approach as "reasonable and sustainable".

He added reserves set aside for long term capital projects could be dipped into if there were an "unforeseen" event such as a prolonging of the pandemic with no government support.

Such a move would avoid Newham ending up in Croydon Council's situation, Mr Hall explained. The south London authority went bust in November.

"There is no prospect of the council running out of money," Mr Hall said.

He vowed to take action against any senior council managers found to take a relaxed attitude to overspending.

Cllr Terry Paul pointed out the watchdog Chartered Institute of Public Finance and Accountancy had looked at Newham's control measures and the council was "bearing down" on costs.

Cllr Mas Patel, voicing concern about the "very low" £4m figure, said: "Reserves in any organisation need to be at a level which give sufficient certainty in terms of its ability to deliver on services."

Cllr Paul replied: "I share a wider concern about our financial situation as an English local authority in a country which is suffering the worst financial crisis for maybe 200 years.

"We're at the mercy of government austerity."

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