Wednesday 24 December 2008
Barnet's Financial Black Hole
When the Conservatives came to power in 2002, they complained, quite correctly, that the previous Labour/LibDem Administration had plundered the reserves. This was one of the reasons that council tax had to go up by 24% in 2003.
But the Conservatives are also very good at spending cash from reserves:
£4 million to pay for the overspend on the Aerodrome Road bridge project.
£250,000 to pay for the feasibility study into the “Future Shape” privatisation project.
£160,000 to pay for the reduced parking charges.
On top of this, Mike Freer admitted last week that there was a shortfall of over £1.5 million in interest due on the council’s Icelandic investments.
He also admitted that every 1% fall in interest rates costs the council £780,000 for the current year and £1.8m for 2009/10. Given that base rates have dropped 3% in the last two months with another 1% likely very soon, we are looking at a further loss of income of anywhere between £3m and £7m next year.
The council is facing a serious black hole in its finances. Next year’s budget is due to be debated by the Cabinet in January. It promises to be one of the most important meetings of recent times. Residents are entitled to know whether council tax will rise or if services will be cut. Perhaps the reserves will be raided again, if there is anything left?
What chance does Barnet have of emulating a proper Conservative council like Hammersmith & Fulham who have recently announced a 3% reduction in council tax next year - for the third year running?