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Parking ‘drives’ £20m budget deficit
City Hall points blame at income from roads as it faces criticism over large financial shortfall
THE council is presiding over a £20million budget deficit, it has been revealed, raising fears of a “clawback strategy” that could spell a further round of job cuts and the introduction of unpopular service charges.
The gaping shortfall, which emerged in Westminster’s latest financial monitoring report, is largely due to falling revenues from parking enforcement and interest payments.
Opposition leaders have been quick to condemn finance chiefs for what they say is reckless “mismanagement” just a year on from the Icelandic bank crash that cost the council £17million in taxpayers’ money.
But this has been strongly refuted in City Hall. Melvyn Caplan, who takes ultimate responsibility for council spending, said that like many local authorities, Westminster has simply been the victim of the recession, and that front-line services would not be hit.
He also promised to work out a “robust” action plan to minimise any knock-on effect on residents, as well as claiming the council’s finance department had proved their competence after being awarded the highest ranking by the Audit Commission.
The council’s root and branch restructuring programme, launched earlier in the year to stamp out bureaucratic waste, led to 270 redundancies.
Major areas of overspend include £5.8million due to a reduction in the recovery rate of parking tickets and £1.2million from the drop in income gained from commercial waste.
The report states: “There is a projected £20.6million overspend against budget.
“The reduction in parking income is a major driver. Immediate action needs to be taken to identify measures to reduce or mitigate the impact of the remaining risks and prevent existing overspends continuing into next year.”
Leader of the Labour group Paul Dimoldenberg said: “This is another spectacular piece of Conservative financial mismanagement which will lead to more misery for many, as more jobs are cut and new charges for services are introduced. Residents are entitled to ask why the Conservatives allowed such a financial mess to develop and who is responsible for these huge losses. We need answers not excuses.”
He went on to criticise the council for banking on revenue from parking enforcement.
“The latest financial disaster exposes the council’s folly of basing much of its finances on income from parking fines,” said Cllr Dimoldenberg. “For years the council has assumed that parking income would keep on increasing, but the reduction in traffic following the introduction of the congestion charge and the impact of economic downturn has take the Conservatives by surprise and thrown the council’s finances into disarray.”
Councillor Caplan, cabinet member for finance, said: “Westminster Council is known for delivering excellent services and consistently low levels of council tax, but in common with local authorities across the UK, we have seen our income levels drop because of the recession resulting in a temporary budget deficit of around £20m.
“We are currently working up a robust plan of action to tackle this, but residents and businesses should be assured that because we have built up substantial reserves and undergone a major restructure stripping out waste and duplication, we are well prepared for these challenging times and will continue to provide first-class frontline services throughout the city.”
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