26 Nov 2024

New figures show the scale of Hackney’s financial challenge

Hackney residents should prepare to see significant changes to services as the Council’s latest financial update showed a need to make around £67 million of savings over the next three years.

The figures, included in the medium term financial plan report agreed by the Council’s Cabinet yesterday, estimate that the Council will need to save £36m in the year from April 2025 in order to meet its legal obligation to balance its budget. This will be followed by savings of £13m in 2026-27 and £18m in 2027-28.

The update comes amid huge financial difficulties across local government, with one in four councils saying they expect to seek an emergency bailout from the government.

A big increase in demand for services in Hackney and the cost of delivering them has put huge pressure on the Council’s finances. This is particularly the case in frontline services that the Council is legally obliged to provide, including housing for homeless people and social care for adults and children.

As a result, the Council is expected to spend £38 million more than budgeted for this year, and without action will run out of financial reserves within three years.

The Council is expected to consider proposals for further savings early next year, in advance of agreeing its 2025-26 budget. A first phase of savings, totalling around £13m, was agreed last month.

In Hackney, we have a track record of strong financial management. But, with our real terms funding from the government this year 40% less than it was in 2010, saving even more means some of the services we currently offer won’t be sustainable.
An ever growing part of our budget is going towards a small number of vital services that we have a legal and moral duty to provide – social care for adults and children, support for young people with special educational needs and disabilities, and housing for those who approach the council as homeless. Yet that means less to go around for the hundreds of other things we do, all of which make a real difference in Hackney.
As much of our shortfall as possible will be made up by changing how we work - investing in areas that will save money in the long run, so we can maintain and improve our services while reducing costs. However, we will need to make some very tough decisions as we work to balance our budget. We will do so carefully, transparently and – most importantly – prioritising the needs of Hackney’s most vulnerable residents first.
Caroline Woodley, Mayor of Hackney