Havering Town Hall. Credit: LDRS
(Written by Local Democracy Reporter, Sebastian Mann)
The ever-increasing costs of child social care and temporary accommodation have weighed heavily on the authority’s finances, a council report reveals.
If it cannot balance its books by the year’s end, it may need to borrow a pre-agreed £32.5m from central government – which would be paid off over the next two decades.
Chris Wilkins, Havering Council’s cabinet member for finance, said the authority “fully recognised the seriousness” of the projected overspend.
He described local government funding as a “broken system” and said the council would “continue to lobby [central government] through all available channels”.
Council leader Ray Morgon said he had written to local government secretary Angela Rayner to outline the council’s position but had “not yet heard back”.
Havering divides its services into two categories: ‘people,’ such as social care and children’s services, and ‘place,’ which covers planning, asset management and environmental matters.
The total budget for its people services is £155m, but the authority is projected to spend some £170m by the year’s end.
The biggest financial burden of all is Havering’s children’s services, provided under the council’s Starting Well programme.
The number of children in care requiring homes has risen “over the anticipated level,” as has the number of disabled children requiring support.
Since February, the council has also been implementing a raft of changes after Ofsted branded the service “inadequate”.
This has further contributed to the £6.3m overspend, the council says, and officials have been “lobbying the government to recognise and support these additional costs”.
Havering is expected to overspend on social care by a further £2.3m. This will be down to an increase in the number of people with learning disabilities receiving supported living services, and an increase in weekly costs following a hike in the national living wage.
The council had put aside a revised budget of £13.2m for its place services, but the report indicates it will end up spending closer to £16.3m.
Environmental services have taken the biggest hit. The council is additionally set to spend £1.5m more on parking than initially planned.
In February, Havering accepted a £54m loan from central government – known as a ‘capitalisation directive’ – after identifying a £32.5m black hole in its budget.
It was allocated £21.2m for 2023/24 and a further £32.5m for 2024/25, but has not yet withdrawn any money from the government’s Public Works Loan Board (PWLB).
Officials are keen to delay borrowing for as long as they can, and finance director Kathy Freeman said she would “take a view” at the year’s end whether to draw from the fund.
She said the council’s financial reserves would be the “first port of call,” and she would “make a call” on whether to use the loan to shore them up.
Havering hopes to save £15m this municipal year, and says it is on-track to squirrel away £9.9m.
Cllr Morgon reassured the cabinet the authority would “certainly be working in the background on lobbying strategies over next number of months”.
