Islington Town Hall. Photograph: Islington Council.

Town Hall bosses have submitted their budget for further debate at a full council meeting the week after next, which includes £25m of savings made for the 2021/22 financial alongside investment in its aim to become net-zero carbon within a decade.

Councillors sitting on the borough’s influential Policy & Performance (P&P) scrutiny committee welcomed the budget being delivered “under difficult circumstances”, while calling for further consideration to be given to the digital divide and its impact on Islington residents.

In their response to the budget, councillors also expressed concerns over “unfairness” that council tenants will face increased charges to park on council estates, while owners of larger electric vehicles will not face comparable increases, with finance boss Cllr Satnam Gill pledging that this issue “could be considered in future”.

Introducing the budget, Gill said: “Generally approved this budget and were happy with the proposals in the budget. They wanted in particular for us to look at the impact on the digitally excluded and those having problems as a result of that in contacting the council.

“We don’t think this budget will have any adverse impact on the digitally excluded. We will do as much as possible to ensure that people who have digital difficulties can access the council and services as easily as before.

“We will continue to run our contact centre to ensure that people who do not have online access can still get council services.

“We are spending £80m in a new build programme, about £17m to tackle the climate crisis including £8m on electrifying the council’s fleet, £6m on people-friendly streets, continuing to operate our We Are Islington response line and programme, and we will be boosting our resident support to help those who are particularly badly hit by Covid-19.”

The Town Hall faced an estimated gross budget gap of £25.745m in 2021/22, which has been balanced in full by the proposals, with a shortfall of £80.405m over the medium term and a remaining estimated three-year gap of £34.209m after the current proposals and underlying assumptions.

The council received just over £9m as part of the government’s £1.55bn Covid-19 grant scheme, with councils advised to plan for no further funding to meet coronavirus costs in 21/22.

Other “significant” cost pressures predicted in the budget are the continued increasing level and complexity of demand for council services, including in adult and children’s social care and homelessness/No Recourse to Public Funds (NRPF) services, with a risk of an increase in demand for mental health services as a result of the pandemic.

Islington’s books are now premised on a proposed increase in basic council tax by 1.99 per cent in 21/22, and identical increases over the next two years as well. A 1.99 per cent hike is equal to an increase of around 47p per week for the borough’s average property, or 4p per week for those receiving council tax support.

Of the just over £25m in savings found, just over £14m are new savings proposals with the rest agreed from prior budgets.

Of the new savings, the largest proportion of £4m has been found by the implementation of a council-wide vacancy factor in posts of five per cent, as a cross-cutting measure across the organisation.

Other proposals include an increase in pay and display diesel surcharge from £3 to £5 per hour for short stays; the decommissioning of a temporary accommodation scheme in Barnet to be replaced with lower cost provision; and a reduction of the need for two carers for domiciliary care service users.

The borough will also see further learning disability reviews, transitions and additional savings from learning disability placement reviews, as well as renegotiation of learning disability out-of-borough residential placements. There will also be a review in mental health services of residents with care packages based out of the area.

Both substance misuse and sexual health will see budget reductions in the council of £150,000, with £80,000 found in the termination of funding for a hospital-based alcohol liaison role.

The report makes reference to the findings of Islington’s external auditor for its 2019/20 statement of accounts that the council’s non-schools general fund reserves are below the average level for London boroughs, adding that: “It is critical that management continue to look beyond the current crisis and maintain sufficient reserves relative to likely future pressures as systemic change and transformation become embedded and begin to realise substantive recurrent savings, to mitigate risks posed by external factors outside of member and officer control.”

According to the report, the council is also currently estimating one of the highest Covid-19 sales, fees and charges income losses in the capital.

The latest budget includes a contingency budget of £5m per annum, which will be made available as a last resort for in-year pressures which would be able to be funded by compensating underspends elsewhere.

The current general fund balance sits at £16.7m, which is equal to just over one week of gross expenditure from the fund, with the budget proposing that any underspend from the contingency budget at the end of each financial year be used to increase the general fund balance to a target level of £40m in the medium to longer term.

In addition to the contingency budget, an additional Covid-19 contingency of £5.5m has been set aside, with Town Hall chiefs expecting this will be needed in full in the coming year; similarly, any underspend from this budget would be transferred to earmarked reserves for Covid-19 pressures.

In investment, the Town Hall is planning a £16m electrification of its fleet, with a programme set to develop electric charging infrastructure. £9m will spent on its People Friendly Streets initiative with £1m for School Streets, while a £3m pilot retrofitting scheme for housing estates will be taken forward to bring about energy efficiency to reduce consumption and decrease emissions.

Cycle schemes will see a £2m invesment in a “significant expansion” of cycle parking and hangars, while another £2m will go on solar panels and LED lighting on the Town Hall’s corporate estate as emission reducing measures.

Officers in the report speak reassuringly of “sufficient resources” being in place to meet expected shortfalls in income and increases in expenditure related to the pandemic and characterise management as “conscious of the need to remain responsive to emerging circumstances, while keeping sight of longer-term strategic goals.”

The report does note an underlying shortfall of around £1.4m in the housing benefit administration budget bridged by an annual drawdown from its reserves, in an exception to normal medium term strategy, and based on an assumption that the underlying shortfall will be fully offset by a permanent reduction in costs when Universal Credit is fully implemented, with officers cautioning this assumption “should be kept under review.”

The report adds: “The budget proposals take into account an unprecedented level of uncertainty around the council’s budget due to ongoing developments around the Covid-19 crisis and the delay of a longer-term local government funding settlement.

“Outwith wartime, Covid-19 has caused the largest shock to the global economy on record, with severe restrictions put in place across huge swathes of economic and social activities.

“Rather than a one-off event that the council’s budget is recovering from, it is expected that Covid-19 will continue to have a significant, currently unquantifiable, impact on the council’s medium-term budget over and above the amount covered by the government’s Covid-19 support package announced to date.

“For example, the Covid-19 support package provides no funding for business rates income losses in 2021/22 and only provides support for sales, fees and charges income losses up until June 2021. Therefore, it is essential that the council has sufficient annual contingency budget and reserves to boost financial resilience and protect residents.”