Havering (Parliament Politics Magazine) – Havering Council warns of multi-million-pound budget overspends for the current financial year, signalling deepening financial challenges ahead.
Like many London local authorities, the council has long faced the biggest financial strains from housing and social care.
Havering exceeded its entire “people” budget, which includes all of the council’s social policies, by more than £20 million last year, and its housing budget by £6.6 million.
23 families are scheduled to relocate into expensive temporary housing, including hotels or bed and breakfasts, in September; the council anticipates that this move will cost £500,000 more than it had budgeted.
However, the town hall is also considering a forecast underspend of £3.7 million in its “place” books, which deal with the borough’s physical environment and community.
This is due to additional income being generated, namely an extra £1.5m generated by hiking the fixed penalty notice charge by £30.
Havering’s total budget for the year is £292m, including the ‘worst-case-scenario’ contingency.
In the report, the town hall said it was
“currently in a period of intense financial pressure as a result of long-standing government underfunding at a time of rapid demographic change and growth.”
Officers added:
“With no substantial change to funding arrangements for 2025/26, while the population continues to grow, this unsatisfactory situation has persisted.”
In February, the council accepted a government bailout of up to £89m to prevent it collapsing into effective bankruptcy. It will be able to withdraw the money as and when it needs it, operating similarly to a line of credit.
The report says the risks will be “carefully monitored” throughout the coming year and are subject to change.
In a bid to save money last financial year, the council closed three libraries in the borough in February and cut back on cultural events, including paying for Christmas lights to be strung up in Romford town centre.
How will the council address the £71 million deficit in the upcoming year?
The council intends to apply for a government-approved capitalisation direction loan, potentially borrowing up to £90 million to cover shortfalls. This loan will need to be repaid with interest over the next 20 years, placing a long-term financial obligation on the council and its residents.
Havering plans to raise council tax by 4.99%, the maximum allowed without triggering a public referendum, to generate additional revenue. Despite this increase, Havering already has one of the highest council tax rates in London.
Having already made £160 million in cuts over the past 15 years, the council may need to make further savings, including potentially closing some community facilities, such as three libraries, and reducing non-essential services.