Havering Town Hall. Credit: LDRS
(Written by Local Democracy Reporter, Sebastian Mann)
That sum includes this year’s deficit of £32.5m, which the council had to temporarily plug with a loan from central government in February.
The budget for 2026/27, which will be drawn up late next year, will include whatever remains of the deficit, meaning the council’s financial pressures will only worsen.
The town hall is currently projecting a potential deficit of £120m by 2028/29.
Kathy Freeman, the council’s director of resources, said: “Every single year, we’re going to have a budget deficit that’s carried forward until the system fundamentally changes.
“Unfortunately, we’re not able to set a legally balanced budget again, unless we go through the route of applying for another capitalisation direction [a loan].”
She added that the council’s current position was “untenable” and it would keep plunging further into debt just to meet legal requirements.
Freeman said the town hall was “already in early conversation” with the Ministry for Housing, Communities and Local Government (MHCLG).
She added: “We’ve been really open with MHCLG that unless there fundamental systemic changes to the funding system, we’re going to be in this position year on year.
“We desperately need something to change.”
Council leader Ray Morgon said he had recently heard from Housing Secretary Angela Rayner, having written to her shortly after the July election.
He said: “The vibes are positive. You can say the right things but it’s ultimately about [the] money you can provide for us.”
Cllr Morgon added: “There’s certainly the will to put those things right, but the big challenge for them is how they raise the necessary revenue to support councils and the public sector.”
The council’s director of resources also told the Local Democracy Reporting Service “multi-faceted” reform was needed.
Kathy Freeman said: “It’s positive that we’ve seen an additional £1.3bn [allocated in the budget for local governments across the UK], but when you boil down what that means for Havering, it will be at best £3m or £4m.”
There also needs to be “recognition” of changing demographics and populations, she said.
“More needs to be done in terms of special educational needs and building a more inclusive approach, so we can reduce the out-of-borough placements, because they’re just not sufficient,” she said.
Councils are legally required to set a balanced budget at the start of each year, with spending and income being level.
Over the past eight months, Havering has explored a variety of ways to potentially save money. It has put forward controversial proposals to close four of its ten libraries, and approved plans to turn ‘underused’ car parks into housing.
Councillor Chris Wilkins, the cabinet member for finance, said the council had also been utilising government grants to build more housing.
He said: “We are in trouble because of funding, not because we don’t want to provide services.
“We need the grant funding to increase significantly – otherwise, we are going to be in a lot of trouble.”
Cllr Wilkins pointed to growing pressures on social services and homelessness as contributing factors.
In September, Cllr Morgon said the council’s hand “had been forced” over making cuts. Various conditions were attached to the loan and Whitehall wants proof the council is making savings where it can.
Havering is not alone in its financial woes. Redbridge Council is currently facing a £33m overspend for 2024/25 and is projecting a £91m deficit by 2030.
National funding for councils has significantly reduced since 2010, according to the Institute for Fiscal Studies. In June, it reported that councils’ funding per person had fallen by a real-term average of 26% across the UK.
