A Labour councillor criticised his own party’s local finance boss for claiming the council was “moving from austerity to stability”, reports Nick Clark, Local Democracy Reporter

Newham Town Hall with Labour councillors Terence Paul (inset left) and Zulfiqar Ali (inset right)

Austerity is “not over” for people in Newham, a Labour councillor has said – as a challenge to his own party’s local leaders.

Last month Zulfiqar Ali, the Labour administration’s cabinet member for finance, said last month that Newham Council was “moving from austerity to stability” thanks to higher-than-expected government funding.

But Labour councillor Terence Paul challenged the claim on Thursday (12th). He said: “The cabinet member for finance has said austerity is over.

“Austerity is not over for residents.

“Without the significant amount of money from the government I think this organisation would be in serious trouble.”

Changes to the way the government allocates funding to councils means the town hall is expected to receive £30million more in April than it expected.

The increase meant council finance chiefs were able to draft a balanced budget for the coming year – having previously faced a £53m funding gap.

Speaking last month, Cllr Ali said the draft budget marked “a turning point away from austerity”.

However, budget plans published last night also include £31m in new “savings” in the coming financial year, which runs from April 2026 until March 2027.

That’s on top of £24.66m of savings for the coming year that were already agreed.

Councillors discussed draft budget recommendations at Thursday’s overview and scrutiny committee meeting.

Cllr Paul argued that the town hall had “struck lucky” with the extra government funding.

He warned that the council still needed to build “sustainability” into its financial management to prepare for new crises.

Cllr Paul said: “Without the money from the special financial review we would be in a hot mess.

“We shouldn’t be making comments that austerity is over – it is not over. The sustainability in our budget is a factor which has not been resolved.”

He added: “Turn on your TV – check Japanese bond rates, check the price of our debt. Something is going to happen – we had Covid – we might be facing some very choppy waters.”

In response, Cllr Ali said the latest budget plans – published as the meeting was ongoing – had “changed substantially in order to enable the council to be in a very strong financial position”.

He said the new plans put in place “very strong” controls and aimed to build up its financial reserves.

Cllr Ali said: “We have turned the situation around.

“The financial situation is much stronger and we’re preparing the foundations for the next administration to make sure there’s continuity and sustainability in terms of finance.”

Maria Christofi, the council’s senior officer in charge of finance, said she wanted to build “three lines of defence” into the budget.

Christofi said if council services found unexpected budget pressures they would be expected to take action to offset the extra costs.

She said the budget also included a £10m contigency for services that couldn’t manage the extra costs.

Finally she said she’d created a new “business risk reserve”. And she said she wanted to top up the council’s general fund reserve – its pot of emergency funding – so that it is equal to 10% of the authority’s overall budget.

Christofi said that this would act as the council’s “final safety net”.

She said: “In the event that the organisation ever has to dip into its general fund balance because it’s exhausted all other avenues it’s a signal that the organisation’s not in a good place financially.”

Leading Labour councillors are set to back the updated budget plans at a meeting next Tuesday (17th). The final budget will then be debated and voted on at a meeting of all councillors on Thursday, 26th February.

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