The Overview and Scrutiny Committee discussed the council's in-year council tax collection rate, noting the significant drop since 2017-18 and that it is currently the 32nd lowest in London. The committee requested an action plan from officers, including more assertive enforcement and a new focus on resident engagement and communication. They also reviewed the Mayor's proposed budget, raising concerns about the level of unallocated capital spending and asking for more detailed information about some of the proposed savings.

Council Tax Collection Rates

Council tax collection rates in Newham have fallen significantly in recent years. The committee heard that the in-year collection rate for 2023-24 is currently 89%, meaning that only 89% of the council tax owed for the year was collected during the year. This is significantly lower than the council’s target of 96.3% and means the council is currently owed £13 million in unpaid council tax, although officers expect to collect much of this money in the future.

I think there has been a hangover from COVID. I think people have been deprioritizing council tax as a debt. I think we need to be quicker and more assertive in our recovery approach. I think that that’s where we need to be.

- Dave Gibbs, Head of Revenues and Transactional Finance.

In response to questions from the committee, officers explained that the COVID-19 pandemic had had a significant impact on council tax collection rates, but that other factors, such as changes to the council’s debt collection processes, had also played a role. The committee also heard that Newham’s council tax collection rate has historically been lower than in other London boroughs, due in part to the borough's demographics. The committee sought assurances that officers had sufficient resources to improve the collection rate and requested to see a copy of the service delivery plan being used to monitor progress.

Council Budget

The committee then discussed the Mayor’s proposed budget for 2025-26. Members were very concerned about the council’s financial position and raised concerns about the council’s reliance on Exceptional Financial Support (EFS) from central government. The committee noted that without significant cuts to services, the council would have a funding gap of £51 million and usable reserves of only £54 million.

Members also raised concerns about the level of unallocated capital expenditure in the budget, which they felt gave the executive too much discretion over spending decisions. They were particularly critical of the decision to approve funding for the Silvertown Bridge project, which was not specifically included in the budget, and which will cost the council almost £1 million per year in interest payments.

...it’s just under [a] million pounds for the next 50 years we’d have been, we if it goes ahead in that way, we’d be paying. And that would be on the revenue project. It’s things like that members want to stop happening, and we say 50...

- Councillor Anthony McCormand, Chair of Overview and Scrutiny.

To address these concerns, the committee proposed a number of recommendations, including:

• That all discretionary expenditure over £50,000 be approved by full council.
• A freeze in councillors’ allowances.
• A reduction in the number of Deputy Cabinet Members.
• That the council’s Our Newham Money service, which provides residents with free and impartial debt advice, be maintained.

The committee also requested more detailed information from officers about a number of the proposed savings in the budget, including the proposal to reduce the council’s Council Tax Reduction Scheme. They also expressed their disappointment at the decision to bring forward cuts to the voluntary sector youth service, which they felt had not been given sufficient notice.

The committee asked for their recommendations to be presented to the Cabinet in advance of their meeting on 18 February 2025.