Inflationary pressures are preventing the council from implementing the Fairer Westminster strategy.

Financial officers have told a group of cross-party councillors that last year was a particularly "volatile" one, with rising costs creating a difficult situation for the Labour Party-controlled council to achieve its "Fairer Westminster" priorities for the 2023-2024 budget.

Inflation has doubled since Westminster Council last approved the budget in March 2022, when it was ruled by the Conservative Party, leading to overspending on forecast spending. However, this is partially offset by an increase in investment income associated with the Bank of England's interest rate rises. "A net overspend of £5m is forecast for this year," the council said in a report.

Since the restrictions were lifted, multiple sources of income for the council have returned to normal levels, but income from parking charges and major planning applications have not reached previous levels. "The cost of living crisis" is expected to persist for a long time, with an estimated 31,000 households in Westminster "particularly affected" as they spend the majority of their income on fuel and food. The government's education grant increase remains markedly below current inflation and schools will continue to face financial difficulties.

The council's staff have produced a draft financial plan which proposes savings and investments to deliver a sustainable budget for 2023-2024. However, the medium term financial plan warns of a £57m budget deficit by 2027, which will need to be closed in the next budgeting plans. Officers are proposing a package of spending savings of more than £15m and the use of almost £6m from reserves to cover the projected budget deficit for the coming financial year. However, these funds will have to be repaid over the next three years. The remaining £1.3m budget deficit for 2023-2024 will have to be covered by additional reserves or a property tax increase.

The latest proposal is being resisted by council leader Adam Hague.

The most significant burden faced by the council as a whole is the cost of managing temporary accommodation. Rental property costs have risen significantly over the past year, and demand for temporary housing "is expected to increase given the impact of various social issues," the budget report said. The homelessness prevention grant from the government will increase by just one percent in 2023-2024 and 2024-2025. This grant is also being used to tackle homelessness and therefore does not take account of increased demand and inflation.

Replacing part of the council's waste and street cleansing transport fleet will save almost £6m in running costs, as well as tackling air pollution and climate change. A number of measures are proposed to increase council fee income. Several of these will be discussed in public consultations.

Groups on budgetary control

With representatives from across the political parties, notably Councillor Paul Fisher from the West End constituency, considered the revenue proposals at two meetings in January. The previous meeting was to review the capital strategy. The groups will submit their comments, which will form the basis for the final budget proposals, which will be considered at a cabinet meeting on February 13, and the full assembly will hear and approve a balanced budget on March 8.

Westminster Council Budget Committee - Thursday, January 19, 2023, at 6:30 p.m.

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Westminster Council Budget Committee - Monday, January 23, 2023, at 6:30 p.m.