Lewisham council is expected to approve a 4.99 per cent increase in council tax for the coming year. 

But senior management has warned there is a risk to recouping it because of Covid-19.  

The council needs to make £40 million in cuts over the next three years. 

The second round of cuts proposals worth £15.1 million have been going around scrutiny committees in the past few weeks, added to the first round of more than £26 million approved by mayor and cabinet in December.  

The total cuts planned for next year are £28 million, which include £10 million being used to address a recurring overspend in the budget.  

Kathy Freeman, executive director for corporate resources, presented the cuts to the public accounts committee on Tuesday (February 2).  

She warned that there is significant risk attached to the 4.99 per cent proposed increase in council tax.  

“The headline from the one-year provisional settlement [from Government] that was announced mid-December was marginally better than expected. 

“We received confirmation for local authorities to be able to raise council tax of up to three per cent in relation to the adult social care precept. 

“The impact of the settlement has meant we are looking at a revised budget gap of £28 million as opposed to £34 million for next year.  

“Within that position we are assuming that the proposal for a 4.99 per cent increase in council tax is accepted.  

“To that I would like to ask members to note that there is quite a lot of collection risk associated with that council tax for next year, given the state of the economy and the impact Covid has had on residents.” 

She warned that it is very important the cuts are approved to enable a balanced budget.  

The council will also likely need to take just over £3 million from its £20 reserves next year to address an overspend not covered by the cuts.  

The budget, set to go before mayor and cabinet on Wednesday (February 3) and to full council in March, includes a proposed rent increase of 1.5 per cent, an average of £1.46 per week. 

Lewisham’s Mayor Damien Egan spoke at the meeting and said the council’s budget is about half what it was ten years ago.  

“Every single year I’ve been on the council – I was elected first in 2010 – this council has been forced to impose cuts on services that we value and that we know make a positive difference for our community. 

“Our budget is about half of what it was ten years ago and we have 1,000 fewer members of staff compared to 2010.  

“Our budget in real terms has gone from just over £400 million to just over £240 million, over the last 10 years, a staggering reduction. 

“Despite Government spin, austerity certainly isn’t over and Covid has only made the situation worse for local councils.  

“The Government’s failure to provide Lewisham with the funding that we need, combined with the financial impact of Covid, means that once again we’re here forced to make further cuts.” 

Mayor Egan added: “There is no doubt that these cuts will leave us worse off as a borough, and there should be no doubt that the blame for that lies squarely with this Government.”

He said if the council does not set a balanced budget, which it is legally required to do, the Government will take control of its budget.