Cabinet agrees “toughest budget ever"

Published: Thursday, 8 February 2024

Havering’s Cabinet has approved the Council’s budget for 2024/2025 in the midst of a funding crisis.

Havering’s Cabinet has approved the Council’s budget for 2024/2025 amid a funding crisis which could see the council triggering a Section 114 notice - effectively declaring itself bankrupt – unless the government approves a £54 million loan (Capitalisation Directive).

At a meeting of the Cabinet last night (Wednesday 7 February 2024), the administration signed off on the budget report for the next year as the authority faces a £32.5 million budget gap, which rises to £81.9 million over the next four years. 

This is set against a backdrop of an outdated funding formula which hasn’t kept pace with the rapid change in population, resulting in years of systemic underfunding from government.

Havering has the second oldest population in London coupled with one of the fastest growing young people populations in the country, which has seen an unprecedented demand for adult and children’s social care. 

This is coupled with the increase in the cost of living and a reduction in available Housing which has led to a significant rise in homelessness and temporary accommodation costs. 

For the next financial year, subject to agreement at Council, it is proposed there is an increase to Council Tax by 2.99 percent with an additional 2 percent, as set by the Government, for social care – making the total proposed increase 4.99 percent. This does not include the Mayor of London’s precept.

After the biggest-ever consultation with residents where almost 4,000 people responded, the budget also includes a number of proposals to make savings or increase income.

  • Generating income through increasing fees for registration services, parking, bulky waste and green waste collections
  • Dimming lights on main roads and being more efficient on road schemes
  • Increase market pitch fees and ending the Sunday market in Romford
  • Reviewing preventative contracts and amending rent subsidies for the voluntary sector
  • Increase events in parks and reduce cost of Christmas lights and trees
  • Launch a review of Children’s Centres and Libraries
  • Review alternative bin collection

Following the consultation, Cabinet has agreed the above changes including launching a separate consultation around individual library closures and alternative bin collections.

In addition, Cabinet has agreed to remove the proposal for charging in park car parks and Sunday parking charges.

They’ve also agreed to a reduction in the proposed pay and display increase from 40 percent to 20 percent, as well as only raising the cost of football pitch fees by inflation.

Work is also taking place to see if Christmas lights and trees can be funded by traders or other groups so that they still go up during the festive season.

Despite the difficult financial challenges – the Council will still deliver statutory services and other services which matter most to residents, including:

  • £5.5million on maintaining and improving roads and pavements and street lighting 
  • continue to fund the S92 police officers to help keep the borough safe 
  • regular rubbish and recycling collections, and street cleaning as part of our new contract with Urbaser
  • improving customer services and digital platforms for residents to access council services
  • investing in new affordable homes for residents through our regeneration programme
  • investing more in delivering vital social care services to adults and children 
  • maintaining 16 green flag parks

Cabinet also approved spending plans for the next four-year Mid-term Financial Strategy (MTFS).

Councillor Ray Morgon, Leader of Havering Council, said: 

“This is undoubtedly the toughest budget we have ever faced. 

“Due to lack of Government funding, inflation and reduced income, we do not have enough money to cover the rapidly rising costs and demand for social care and housing those who are homeless.

"This is forcing us to make some difficult decisions.

“As part of the process, we ran a budget consultation towards the end of last year.

"It was quite clear there are a number of areas of change that residents feel strongly about, we have listened and as a result, we have made some changes to the original proposals.

"This includes not doubling the fees for parking charges, not introducing Sunday parking and charges in park car parks.

"We can only do this because we have some unexpected additional income from our leisure contract, our East London Waste Authority contract and extra money from the Government.

“However, sadly, there is a limited number of changes that we can make due to our financial position and we have to propose a 5 percent council tax increase.

"We will further consult on any individual library closures as well as any changes to how we collect your rubbish.

“We also need to remember that legislation controls much of what we have to do and this will include by April 2026, the separate collection of food waste.

“We will still deliver our statutory services (those that we must deliver by law) plus many others that are most important to residents but we will seek to carry them out in an even more cost-effective and efficient way.

"Independent analysis has shown Havering to already be a low-cost Council and one of the most productive in the Country.

"We will never rest on our laurels and will continue to ensure that we use our resources in the most efficient way. 

“None of this though is enough and we have asked the Government for a capitalisation directive, which is a loan to bridge the gap between the monies that we have and what we need to spend in both this financial year and next.

“As part of this, we’ve had good meetings with the government who understand our unique situation and we are hoping to obtain a better outcome around the repayment of this loan. We also discussed other solutions and work will continue on this.

“If the Government do not provide the loan, we will not be able to set a legally balanced budget and our finance director will have to issue a section 114 notice which says that we no longer have the resources to cover our costs.

"In layperson’s terms, we are effectively bankrupt. 

“However, all this would mean is that the government will still give us a capitalisation directive but it will come with many strings attached.

"Elected councillors would no longer have any control over spending plans, the government could drastically cut back on services. and sell all our council assets – although we have already sold £160 million worth of assets and plan a further £10m year on year.

“We will now take this budget for final approval to full council on 28 February – where I hope this will be passed by councillors in order to avert the need for a Section 114 and to do what is in the best interests of residents and our borough.”