News from Westminster Labour

£20m budget hole found; Westminster braces for more cuts and charges

Westminster City Council has a £20 million hole at the heart of this year’s budget, according to the latest Council financial monitoring report. The £20 million shortfall is expected to lead to further job cuts, in addition to the 300 redundancies announced a few months ago, and more new charges for services, such as the £20 fee for the collection of bulky refuse to be introduced next Monday.

The financial monitoring report for the second quarter (July – September) reveals that:

“There is a projected £20.6m overspend against budget. The reduction in parking income (£5.8m) is a major driver.”

“The projected outturn is £26.1m above the service department budgets. After adjustments for risk and contingency provisions the projected net overspend is £20.6m without further mitigating action. As a result, this would reduce general fund balances to £27.7m which would be below the lower threshold target for general fund reserves of between £30m and £40m.”

“Investigations throughout the last 6 months to identify mitigating actions to reduce the “at risk” items have so far failed to generate a solid strategy to reduce the overall potential net overspend. Budget shortfalls are therefore looking increasingly certain. Immediate action needs to be taken to identify measures to reduce or mitigate the impact of the remaining risks and prevent existing overspends continuing into 2010-11.”

The major areas of overspend are:

1. Parking (£5.8million) – Further projected variances on parking ticket revenues (£1.8m), a further reduction in the recovery rate (£0.7m), the deployment of enforcement officers (£1.6m), and £1.7m of Non recovery of prior years debt, have all contributed to the increase in the overall deficit to budget this month.

2. Cleansing (£1.2million) – An increased shortfall of £0.9m in commercial waste income has been reported, and £0.3m of unrealised Cabinet Member savings have been reported as a variance in the period.

3. Finance and Resources (£1.0million) – Shortfall on S106 income, unrealised communications savings targets (as budgets have not been transferred from other departments which would have initiated the savings reductions), and the impacts of policy changes on NNDR discretionary relief and Capita savings targets.

In addition the Council has lost over £5 million in anticipated interest payments, following the reduction in interest rates earlier this year.

The £20 million hole in the Council’s budget is in addition to the £17 million put at risk through investing in now-failed Icelandic Banks.

Councillor Paul Dimoldenberg, Leader of the Labour Group said:

“This is another spectacular piece of Conservative financial mismanagement which will lead to more misery for many, as more jobs are cut and new charges for services are introduced. Residents are entiled to ask why the Conservatives allowed such a financial mess to develop and who is responsible for these huge losses. We need answers not excuses. We need to know how services to the most vulnerable will be protected.”

“This latest financial disaster exposes the Council’s folly of basing much of its finances on income from parking fines. For years the Council has assumed that parking income would keep on increasing, but the reduction in traffic following the introduction of the congestion charge and the impact of economic downturn has taken the Conservatives by surprise and thrown the Council’s finances into disarray”.

“Far from being the party of economic competence Westminster Conservatives have again proved themselves to be financial fools”

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