Lewisham public accounts committee discusses cuts

The council needs to make £40 million in cuts over the next three years, £24 million of them next year.

Proposals for £26 million of the cuts have been going around scrutiny committees, with the second tranche set to be announced in January. All of the cuts will go before full council in February.

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Lewisham has a “persistent” overspend of around £10 million – though it is reducing – that it also needs to contend with.

At the moment there is a potential gap of £34 million next year, though the local government finance settlement is yet to be announced.

The council’s latest financial monitoring report, which sets out how it’s doing financially, shows that £6.7 million of its planned cuts for this year are either delayed or at risk.

Just over £1.9 million of that figure is flagged as ‘affected by Covid-19’.

At the meeting of the public accounts committee on Thursday, Cllr Paul Maslin asked what it means that the council has to balance its budget.

“In recent years the budgets that we’ve set have just disintegrated on first contact with reality,” he said.

I can give assurance that we’ll monitor expenditure really closely, we’ll flag the risks, we’ll mitigate the risks when they arise, we’ll do what we can to reduce the overspend as much as possible

Kathy Freeman, director of corporate resources, who presented the report on the cuts, said councils are legally required to set a balanced budget.

“The situation with overspends is that we’ve made a series of assumptions and a different set of scenarios or circumstances will happen outside of our control, such as an increase in demand or additional burdens, or changes in legislation.

“That then requires the council to take on additional duties that we don’t always plan for,” she said.

Ms Freeman said she couldn’t guarantee there wouldn’t be an overspend next year.

“But I can give assurance that we’ll monitor expenditure really closely, we’ll flag the risks, we’ll mitigate the risks when they arise, we’ll do what we can to reduce the overspend as much as possible,” Ms Freeman said.

She said next year will be difficult because of uncertainty around the economy, council tax, business rates, and the level of need from service users.

Cllr Maslin also asked if there was “institutional bias” in the way that “officers consistently underestimate future expenditure”, suggesting a reluctance to “tell members things they don’t want to hear”.

Chief executive Kim Wright refuted this, but added that the themed approach to the cuts is different this year and that the proposals would undergo “robust” monitoring.

Cllr Alan Hall, vice chair of PAC, said the council must be “tougher” with its contractors.

“I’ve seen some beautifully written contracts, with many stipulations about what must be delivered.

“If something goes wrong they clearly haven’t been delivered and it’s making sure that we as a council don’t pay for that,” he said.

Cllr Hall also urged the council to “listen and engage” with service users as they “are the experts”.

I’m not convinced all members have grasped how severe the situation is

Cllr James Rathbone urged the committee to accept the proposals to avoid being in a situation like Croydon Council, which has gone bankrupt in the wake of Covid.

“I’m not convinced all members have grasped how severe the situation is,” he said, adding the “reality is, the only way that we can possibly balance the budget […] is that there are going to have to be significant cuts to statutory and non-statutory services”.

Cllr Jim Mallory also urged the committee to accept the planned cuts so the next stages in the process could go ahead.

The committee agreed a set of referrals for mayor and cabinet, including agreeing that the proposals go forward, that a review of adult social care services was needed, that consulting with service users is done properly, and that impact assessments of the cuts are done and explained to the public.

Finance cabinet member Cllr Amanda DeRyk said she welcomed “everyone's comments and diligent scrutiny”. 

“I understand people's concerns and reiterate that these are very difficult cuts that we're facing," she said. 

Cllr DeRyk added that she “particularly understands” the importance of finding solutions by working with service users. 

“I also absolutely underline the importance of the contract management across every single contract that the council uses,” she said.