London council on brink of bankruptcy to dim streetlighting and cancel Christmas decorations

A London council on the brink of bankruptcy will dim its streetlights, review bin collections and stop funding Christmas decorations in a desperate bid to save cash.

Havering town hall is proposing the raft of cost cutting measures alongside a 5% council tax rise later this week.

Residents in the borough already face some of the highest council tax bills in the capital, with the average household paying £2,088 a year.

But the independent-run local authority argues it is facing a £32.5million budget gap this year, which rises to £81.9million over the next four years.

Councillors have warned that unless the Government approves a £54million loan the borough will have to declare bankruptcy within weeks.

In a cost-cutting budget the town hall agreed to dim street lighting on main roads, explore alternative bin collections and review children’s centres and libraries.

The council also said work is “taking place to see if Christmas lights and trees can be funded by traders or other groups so that they still go up during the festive season”.

However, it has reversed plans to double parking charges.

Local authority plans to slash electricity costs by around £50,000 a year by turning down street lights have been criticised by women’s safety charities.

Leader Ray Morgon said the borough has been placed under unprecedented financial pressure because of its ageing population and rising homelessness.

“This is undoubtedly the toughest budget we have ever faced,” he said.

“Due to lack of Government funding, inflation and reduced income, we do not have enough money to cover the rapidly rising costs and demand for social care and housing those who are homeless.

“Sadly, there is a limited number of changes that we can make due to our financial position and we have to propose a 5% council tax increase.

“We will still deliver our statutory services plus many others that are most important to residents but we will seek to carry them out in an even more cost-effective and efficient way.

"Independent analysis has shown Havering to already be a low-cost Council and one of the most productive in the Country.

"We will never rest on our laurels and will continue to ensure that we use our resources in the most efficient way.

“None of this though is enough and we have asked the Government for a capitalisation directive, which is a loan to bridge the gap between the monies that we have and what we need to spend in both this financial year and next.

“As part of this, we’ve had good meetings with the Government who understand our unique situation and we are hoping to obtain a better outcome around the repayment of this loan. We also discussed other solutions and work will continue on this.

“If the Government do not provide the loan, we will not be able to set a legally balanced budget and our finance director will have to issue a section 114 notice which says that we no longer have the resources to cover our costs.

"In layperson’s terms, we are effectively bankrupt.”

He added that the council has already sold £160million worth of assets to raise cash and plan to dispose of a further £10million worth year on year.

Havering Council plans to officially pass its budget on February 28.

Housing Secretary Michael Gove last month announced upper tier councils will be handed an additional £500 million for children’s and adult social care in 2024/25 following recent warnings of further bankruptcies.

Local authorities across the country have said they are facing severe financial pressures due to rising social care costs and spiralling homelessness.

Boroughs in the capital are at the forefront of the crisis.

One in 50 Londoners is classed as homeless, according to umbrella group London Councils, and this has caused council temporary housing costs to soar.