A budget report by Tower Hamlet’s Borough Council has revealed that an extra £400,000 of council tax-payer’s money may be needed to fund its controversial local authority-run newspaper.
The East London council claims East End Life costs taxpayers just £118,000 a year with the remainder of its £1.6m annual budget coming from advertising.
But a budget report shown to councillors last week revealed the free paper had suffered a £396,000 shortfall in advertising revenue because of the recession.
Deputy leader of the Labour-run council, Joshua Peck, said the mid-year report shown to councillors was a “worst-case scenario” for the current financial year.
Conservative councillor Tim Archer claimed the shortfall would need to be offset by additional funds provided by council tax-payers.
Archer told the East London Advertiser: “People in Tower Hamlets will have to pay nearly another £500,000, this is money which could be spent on important services or projects.”
Earlier this year Archer put forward an alternative budget calling for the council to scrap its “propaganda paper” and save £670,000 annually by instead advertising its vacancies in its local paper, the aforementioned East London Advertiser.
Peck said the council would look to meet any shortfall in advertising revenue by making savings from its communications budget.
Publishers of regional newspapers have been increasingly critical of local authorities that publish their own newspapers, accusing them of undermining their ability to generate advertising revenue in local markets.
So concerned have newspaper publishers become that former communications minister Lord Carter asked the Audit Commission to investigate the effect of council-run papers on local titles as part of his Digital Britain white paper earlier in the summer.