Services and jobs at risk as Lewisham faces £25m overspend due to Covid and austerity

Pounds Sterling. Pic: Dominic Lipinski

Lewisham could be facing huge public service cuts and potential job losses because of a huge overspend by the council this year. 

An official audit last week into the state of Lewisham Council finances revealed a £25.6 million overspend in 2020/21. As a result, the council will carry out a tough budget review to deliver half of the £40 million cuts needed before April 2024. Lewisham’s crisis comes after it was disclosed that Croydon is also deeply in debt due to poor investments and the impact of the pandemic on social care.

A Lewisham Council spokesperson told Eastlondonlines: “Over the next three years the majority of cuts will be delivered through cross-department transformation themes.”

“We must now begin the long, difficult process of identifying cuts of at least £40 million for the next three years (to April 2024) … It is inevitable that some services will be reduced or stopped.”

The council plans to build on the success of considerable IT investments and to extend working from home arrangements beyond the pandemic to improve staff productivity and efficiency. There are also plans to shift sexual health services to an online service, except for vulnerable patients.

Civic events – like the recently cancelled Blackheath fireworks – are under threat as the council continues to “seek efficiencies” in this department of £100,000 over the next four years. Likewise, the cuts include a reduction in local assemblies which aims to save the council £223,000. 

Regeneration plans for Catford town centre will be “accelerated” to explore potential investment opportunities. This project includes a plan to build 250-300 rental homes, make major improvements to transport and pedestrian infrastructure and build shops and other amenities by 2023/24.

Impact of Covid-19

In a press release, Mayor of Lewisham Damien Egan said: “The combination of a decade of austerity and the financial impact of COVID-19 is taking its toll… I’m incredibly proud of the work the Council is doing to support our residents, but this comes at a cost, that without further financial support from government, we simply cannot afford.” 

He added: “We can’t rule out the possibility of redundancies over the coming years, but we are doing everything we can to protect jobs.” 

Lewisham’s economy has been affected by the furlough of 32,000 people between March and June this year and a 90% increase in households receiving Universal Credit. The council has delivered over 11,000 food parcels and housed 1,127 people facing homelessness throughout the pandemic.

It has also faced the pressures of administrating business grants and dealing with the closure of schools and car parks. This has created budgeting issues especially in the Children and Young Peoples, and the Housing, Regeneration & Environment directorates.

The council accepts it’s in a “challenging position” but says local governments across the country are facing difficulty, with a collective £4bn funding gap to keep services running.

Uncertainty continues

Councillor Amanda De Ryk, Cabinet Member for Finances and Resources said in a statement: “We do not know what funding might be available in the long-term and there is still uncertainty around what the government might share even for the next financial year.”

While Lewisham was considered a well-run council until a few years ago, critics now worry that it is following Croydon Council down a path of financial difficulty. Its situation was not much better before the pandemic: Lewisham reported an overspend of £5.9m in 2019/20.  In fact, its troubles can be traced back to 2018, when ELL reported a £12.8 million children’s care overspend “due to poor record-keeping”.  

The proposed cuts will be subject to a decision at the Mayor and Cabinet meeting on December 9. The council hopes the consultation for the budget will be concluded before April, so the effect of the proposals over the full financial year 2021/22 is achieved. 

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