Islington Council is set to increase council tax and make more than £10 million worth of savings as the cost-of-living crisis and reduced funding from central government bite.

Before the proposals for the next financial year (2023/24), the local authority was facing a black hole in its budget of more than £25m.

Adult social care and children’s services are earmarked for reduced funding, while council tax is set to rise by 4.99 per cent.

The council tax increase includes a 2pc rise to help meet the increasing cost of adult social care.

The council said that inflation, which according to Office for National Statistics data stands at more than 10pc, and a real-terms funding cut of more than £10m from central government, has put its budget under pressure.

It is planning savings of £10.9m in its general fund budget in 2023/24.

To help residents struggling with the cost-of-living, the authority said that it will create a £1m hardship fund.

The fund will start accepting applications for those in need, mainly households whose income only just lifts them out of benefit entitlement, before the end of March.

The budget plan will also protect the council tax support scheme, which cuts 95pc of the council tax bill for around 18,000 low-income, working-age households.

The budget proposes to allocate £1m to a new damp and mould action team, after the Housing Ombudsman launched an investigation into Islington Council after complaints of damp and mould in some of its homes.

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Cllr Diarmaid Ward, the council’s deputy leader and executive member for finance and performance, said: “This is a really difficult time for local people and for the local services they rely on, because of spiralling inflation and incredible pressure on household budgets that were already stretched, and the effects of years of Government underfunding for services. 

“We’re totally committed to helping people through this however we can, but it’s important to be frank about the financial realities. Central Government has yet again passed the buck back to local authorities – all its calculations assume that councils will raise council tax by the maximum amount. 

“We’ve been forced to adopt the increase to avoid having to make even deeper cuts to local services. We will not stand by and allow this crisis to squeeze even more people into homelessness.” 

The budget proposals will now be presented to the council’s executive on January 12. They will be debated by full council on March 2, when the finalised budget for 2023/24 will be set.

To read the council’s full budget proposals click here.