Council leader Grace Williams said the government’s funding strategy for local authorities is ‘very, very short term’, reports Josh Mellor, Local Democracy Reporter

The council said it is considering making staff redundancies because it does not yet know how much government funding it will receive from next year onwards.

Speaking at cabinet yesterday (2nd November), council leader GraceWilliams said the government’s funding strategy for local authorities is “very, very short term”, despite an increase in demand from residents and the cost-of-living crisis.

The council – which is legally required to balance its budget each year – says it is likely to spend £16million more than planned at the start of the year, with a predicted funding gap of “£20-30m” over the next three years.

Much of the budget shortfall comes from a high demand for social care services it must pay for such as supporting elderly residents, caring for looked after children and special educational needs.

Redundancies, cutting the use of agency or consultancy staff, and “deletion” of jobs are all being considered as short-term cost-cutting measures.

However, the council says it will need to “go further and deeper” in the long term by changing some services to “digital self-serve wherever appropriate” and targeting residents with the highest needs in a bid to prevent greater costs in the future.

Cllr Williams said: “Everything we do matters now, we need to make sure that everything we do is geared towards financial stability and sustainability and finding a way through this, and the sooner we do that, the better position we’ll be in.

“[This budget report] does set out really well what our longer-term approach is and the fact that there is such a clear relationship between looking at what we’re doing financially but also looking at how we meet the needs of residents.

“And if we do one without the other, I think we really fail in our duty.”

This year’s £16m gap is a significant increase from February, when the council’s financial strategy suggested it did not face a shortfall.

Waltham Forest Council is not alone in facing a budget crisis, London Councils has warned of a £400m budget overspend in the capital this year due to a “perfect storm” of inflation, growing demand for services and “insufficient” government funding.

One in 50 London residents are estimated to be homeless and living in temporary accommodation provided by their council.

Councillor Claire Holland, acting chair of London Councils, said: “Borough finances are on a knife edge – with grim implications for the future of local services in the capital.”

Council leader Grace Williams (right) speaking at a cabinet meeting on 2nd November (Credit: Waltham Forest Council)

Cabinet member for public services Paul Douglas, who oversees the council’s finances, said “competent governments” in the past gave councils a three-year financial settlement, which allowed them to plan.

He added: “We no longer live in that time, so we get a one-year settlement. So we don’t know how much money we’re going to get next year yet.

“So this is the best effort that officers can come up with as to what the budget looks like for the next three years – but there are so many variables.

“This is going to change not just between now and when we set the budget, but also over the next three years… inflation is high, we don’t know how much money we’re gonna get.

“There are so many other factors. So this is a very high-level look at what the [medium-term financial strategy] looks like currently.”

A more detailed report on the council’s financial strategy is expected to be published in December.

The council pays for most of its services through council tax and government grants, which have been cut significantly in the last decade.

To deal with increased costs and avoid cuts to services last year and this year, the council used savings it had set aside for specific needs, known as earmarked reserves, which fell by 11% to £69.4m by March 2023.

It has also put in place “savings” and cuts of £6.4m.

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