A Lewisham council boss has warned cuts with “significant” implications for staff are expected in January.
Lewisham’s first round of draft budget cuts is currently circulating among scrutiny committees.
Kevin Sheehan, executive director of housing, regeneration, and environment, presented the details and context of the proposed cuts to the housing select committee on Wednesday (November 18).
To balance its budget, the council needs to make cuts of £40 million over the next three years – £26 million of those proposed were made public this month.
The council identified £15 million of proposed cuts for next year, but “at least” £24 million need to be made – the rest are set to be published in January.
Mr Sheehan stressed the situation is “uncertain” as the Government has yet to publish its comprehensive spending review, which is late and will only cover one year because of Covid-19, while the annual local government settlement will not be released until mid to late December.
Lewisham has racked up a £68 million “and rising” bill in the wake of the pandemic, but the Government, which initially said it would pay councils’ costs for Covid-19, may not cover all of them.
“We need to take account of the risks […] and think about how we’re going to balance our books,” Mr Sheehan said.
He told the committee he has worked in local government for a “very long time” and has “never seen such a challenging financial time”.
He said he was “happy to say” there would be no redundancies in relation to housing in the first round of cuts.
“That’s because the service has been so good at making efficiencies in the last year,” Mr Sheehan said.
But he warned the next round to be announced, around £18 million, would have “significant staffing” implications.
Mr Sheehan explained to the committee that the council is taking a “thematic approach” rather than looking at individual areas.
Officers focused on increasing productivity, taking advantage of new technology, having a more “commercial” mindset with its assets, and managing demand for services better.
The council’s updated IT system is expected to save money, including £202,000 next year from a new self-service portal for landlords to submit and track their applications, which will reduce the council’s reliance on agency staff.
The council also plans to save £127,000 next year with a move to more remote working in the housing needs service.
Some temporary accommodation – 942 Lewisham households – is managed by or leased to the private sector.
Lewisham currently subsidises the Private Sector Lease (PSL) and Private Managed Accommodation (PMA) schemes to the tune of £1 million.
It plans to raise rents for both to be in line with London Housing Allowance (LHA), a move expected to bring in £675,000 over the next two years.
Mr Sheehan said tenants won’t be affected and it was about “working more smartly” with the Department for Work and Pensions (DWP).
“This does not increase the rent to the tenant because by increasing the rents it will mean that the council can claim back extra housing benefit, which will mean that our subsidy to these rents will reduce […],” he said.
The extra housing benefit is expected to cover 93 per cent of households, and the council intends to cover the rest with discretionary payments.
Committee chair, Cllr Peter Bernards, insisted that the council must ensure no tenants are affected.
Cllr Silvana Kelleher said it’s “vital” that those on low income, but not receiving benefits, do not “slip through our net”, which Mr Sheehan agreed with.
The council is set to save £300,000 next year by getting people with no recourse to public funds regularised immigration status so they get financial support through benefits.