Wandsworth Denies Massive Black Hole in Finances

Newspaper claims borough may need to double what they charge for Council Tax

Wandsworth Council have angrily denied a newspaper claim that a shortfall in their accounts could lead to a massive rise in Council Tax rates.

An article in the Wandsworth Guardian states that the era of low taxes in the borough could be coming to an end because rates have to rise soon to meet a black hole in funding. The paper claims that Band D council tax may have to increase from £683.42 to £1,145.88, including the Greater London Assembly contribution by 2017-18. The overall increase would be less because it is planned to reduce the GLA precept but effectively the rate charged by Wandsworth would more than double in two years in this scenario.

The newspaper’s claims are based on a report by the borough’s auditors, PWC, which was completed in October 2015 and presented to the Council’s audit committee at the end of January.

The audit report by PWC into finances at Wandsworth Council indicates a shortfall of more than £32 million in 2016-17, and a cumulative gap of £54 million by 2017-18. This is mainly due to a fall in central government’s Revenue Support Grant to Wandsworth which was £78 million in 2014/15 but is projected to be £18 million in 2017/18.

They said that the Council need to ensure actions are underway to close the budget gap. The report stated, ‘We are aware the Council is in the process of determining actions to reduce the Council’s medium term “budget gap” and to update it to take into account the Spending Review when published in November 2015 and the Local Government Finance Settlement in December 2015.’

The Council have dismissed the claims out of hand with finance spokesman Guy Senior describing them as absurd and implausible. They have requested that the Wandsworth Guardian withdraw the article from its web site.

Cllr Senior said, “We did explain to the newspaper that a hike of this absurd magnitude is not plausible but it seems they didn’t want this fact to get in the way of sensational headline. It’s a great shame and does the newspaper no credit.

“Our budget and council tax proposals for next year will be presented to our finance committee later this month giving local people the chance to scrutinise the real proposals. It goes without saying that a 75 per cent tax hike is not going to feature.”

The 2015-16 budget was balanced by taking £9.8 million out of reserves but future shortfalls may have to be covered by cuts in spending. A £10 million reduction in spending is anticipated once the merger of staff with London Borough of Richmond on Thames is completed.

Central Government has been tightly controlling Council Tax increases by local authorities with severe financial penalties for any Council that raises rates by more than the allowed amount. Last year Wandsworth left Council Tax rates unchanged and this year, even if they were to increase by the maximum allowable that would only raise £2 million. There is the option for Councils to put larger tax increases to a referendum.

Wandsworth’s Band D council tax bills are currently the second lowest in the country and roughly half the London average.

February 4, 2016

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Front cover tweeted by @wandsworthnews

PWC Audit Report into Wandsworth Council