Key Points
- Hackney Mayor Caroline Woodley asserts the borough is “rising to the financial challenge” as local government finances across England face a “perilous” state.
- A Public Accounts Select Committee report warns that current central government support for councils is “short-term and unsustainable”.
- Chancellor Rachel Reeves’ recent spending review includes a 1.1% annual budget increase for the Ministry of Housing, Communities and Local Government (MHCLG) and a £39bn affordable housebuilding package.
- The government has extended an accountancy loophole allowing councils to write off special educational needs and disabilities (SEND) deficits for two more years, averting a “cliff-edge moment” for many authorities.
- Hackney’s Town Hall is restructuring to cope with rising service demand while aiming to protect the most vulnerable residents.
- Mayor Woodley welcomes the government’s commitments, which support her ambition to build 1,000 new social rent homes and provide greater certainty in managing housing stock.
- Despite a £25m central government injection, Hackney still faces a £51m budget gap by 2028, down from an initial £67m.
- The National Audit Office highlights “systemic weaknesses” in local government finances due to soaring costs for essential services like temporary accommodation and social care.
- Mayor Woodley emphasises the importance of digital transformation and cross-party cooperation to maintain services and uphold Labour values of fairness and equality.
- Former Mayor Philip Glanville previously criticised government austerity, noting Hackney now has £152m less to work with per year than in 2010, with demand for services rising sharply.
Hackney’s Mayor Vows Borough Is ‘Rising to Challenge’ as Local Authority Finances Reach ‘Perilous’ State
What Prompted the Mayor’s Statement on Hackney’s Financial Situation?
As reported by Ed Sheridan of the Hackney Citizen, Mayor Caroline Woodley declared that Hackney is “rising to the financial challenge” in response to mounting concerns over the “perilous” state of local government finances across England. Her remarks followed the release of a new Public Accounts Select Committee report, which highlighted that surging demand for council services is being met with “short-term and unsustainable” central government support.
The report’s publication coincided with Chancellor Rachel Reeves’ Treasury spending review, which outlined a modest 1.1% annual budget increase for the Ministry of Housing, Communities and Local Government and a £39bn support package for affordable housebuilding. The review also introduced a decade-long “social rent settlement”, allowing council housing rents to rise in line with the Consumer Price Index plus one percent.
How Did Mayor Woodley Respond to the Government’s Spending Review?
Mayor Woodley told the Hackney Citizen that the commitments announced in the spending review were “so welcome”, noting that they would support her goal of building 1,000 new social rent homes in Hackney and provide the Town Hall with “greater certainty” in managing its housing stock. She said:
“Ministers have heard the call for investment I’ve raised on behalf of Hackney, and in partnership with colleagues across London Councils and the Local Government Association.”
— Caroline Woodley, as quoted by Ed Sheridan, Hackney Citizen
When asked whether the Chancellor’s decisions represented a more sustainable approach to council funding, Mayor Woodley acknowledged the positive steps but stressed the ongoing need for long-term solutions.
What Measures Is Hackney Taking to Cope With Financial Pressures?
According to Ed Sheridan of the Hackney Citizen, Mayor Woodley outlined that Hackney Council is “developing ambitious plans to change how we work, cutting costs whilst improving services for our residents”. She emphasised that “protecting Hackney’s most vulnerable residents remains my priority” despite stretched budgets.
The council is currently undergoing a significant restructure to address rising demand for services. Mayor Woodley highlighted the role of digital transformation in driving efficiency and cost-cutting, describing the delivery of a balanced budget as a “landmark” achievement in the current financial climate.
What Is the Impact of the Accountancy Loophole Extension for SEND Deficits?
On the same day as Mayor Woodley’s statement, the government announced it would extend an accountancy loophole allowing councils to write off overspends on special educational needs and disabilities (SEND) for another two years. This mechanism, previously set to expire in March 2025, had left many councils fearing a “cliff-edge moment” if it was not continued.
Mayor Woodley expressed relief at the extension, telling the Hackney Citizen:
“This confirmation helps us plan for the long term.”
— Caroline Woodley, as quoted by Ed Sheridan, Hackney Citizen
While some council leaders and experts welcomed the move, they cautioned that many authorities still face the threat of having to cut spending on essential services. The Select Committee’s report warned that without further action, numerous councils could be at risk of “effectively going bankrupt” if the loophole expires without a replacement.
How Is Hackney Balancing Labour Values With Financial Constraints?
In an earlier interview with the Hackney Citizen, Mayor Woodley defended the council’s approach, stating, “I’m still hopeful because we’ve organised things now in Hackney”. She described the delivery of a balanced budget as a significant milestone, given the challenging context of years of cuts and rising service demands.
The debate over Hackney’s values became heated at a recent budget meeting, with Green group co-leader Councillor Zoë Garbett questioning the mayor’s level of “outrage” over the continuing budget gap and service pressures. Mayor Woodley responded by accusing opposition councillors of “jumping on every populist cause in the borough” but later apologised for the tone of the exchange, reiterating her commitment to cross-party cooperation in supporting vulnerable residents.
She stated:
“We are the political administration, the Labour Party, and we want to bring our Labour values to bear – and that’s around fairness and equality.”
— Caroline Woodley, as quoted by Ed Sheridan, Hackney Citizen
What Are the Broader Challenges Facing Hackney and Other Local Authorities?
The National Audit Office recently highlighted “systemic weaknesses” in local government finances, driven by ballooning costs for essential services such as temporary accommodation and social care. Hackney’s situation is emblematic of the wider crisis facing councils across England.
Former Mayor Philip Glanville, writing in The Independent, previously criticised central government austerity measures, noting that Hackney now has £152m less to spend each year compared to 2010, while demand for services has increased by £42m. Glanville described the government’s approach as “the longest, most sustained attack on local government finances since Hackney Council was established in the 1960s” and warned that, if austerity continued, some councils could fail, with devastating consequences for vulnerable residents.
Glanville also highlighted the challenges of building new social housing, explaining that the lack of government funding has forced councils like Hackney to sell homes on the open market to finance the construction of genuinely affordable homes for those in need.
What Does the Future Hold for Hackney’s Residents?
Despite the daunting financial landscape, Mayor Woodley remains optimistic about Hackney’s ability to adapt and protect its most vulnerable citizens. She has prioritised digital transformation and efficiency drives to maintain service quality, even as further cuts pose risks to already stretched services.
The mayor’s focus on cross-party collaboration and the pursuit of fairness and equality reflects her commitment to Labour values, while her pragmatic approach to budgeting and service delivery aims to navigate the borough through a period of unprecedented financial strain.
