THE JIGSAW: Unlocking the Puzzle Behind Havering’s Financial Solution Revealed.
Councillor Graham Williamson Cabinet Lead for Development, Regeneration and Inclusive Growth, addresses the pressing financial challenges faced by Havering in an exclusive piece for the Havering Daily.
Most residents will be aware of Havering’s dire financial situation. Years of underfunding and a now burgeoning demand on our social services is leaving us on the brink of declaring an S114 (a form of ‘bankruptcy’). This would result in control going to Government commissioners selling off all our assets and raising Council Tax to unprecedented levels.
The Council Leader and others have regularly lobbied the Government with facts and figures but to no avail. The Government is either in denial or too distracted by a pending election to want to resolve its fundamental failure to financially protect Councils.
However, the lack of public sector funding might be best resolved by the private sector i.e., inward investment. The increasing level of business interest in our borough (although residents will not yet be aware) is an opportunity we must grasp. In the following article, I discuss the financial and wider problems Havering suffers from and how private investment can be an answer.
Havering is in the outer north-eastern region of the Greater London Authority and borders Essex. It is the second largest sized borough in London with 52% of the land designated Green Belt. Most development has been suburban in nature but more urban housing has emerged in recent years. There are four Triple-digit A roads, one tube line (District) and two main rail lines (including the new Elizabeth line), running through the borough (but only east to west). The population has grown to over 260,000.
The Problems
COUNCIL UNDERFUNDING
Ever since the 1980’s Havering has been short-changed of Government funding *1. For example, in 1993, in response to a question from Robin Squire (Hornchurch) MP, the Government provided a list of the Grant per head given over the period 1980 to 1993. On average Havering residents received an average of £225.69/person. Neighbouring East London Councils however received significantly more e.g., Barking and Dagenham £265.69, Newham £518.08, and Tower Hamlets 558.93.*2
This discrepancy continued and indeed widened over the years until all Councils experienced austerity cuts following Government policy. Thus, in 2010 the Government’s Rate Support Grant to Havering stood at £70m. This was progressively reduced year on year and was only £1.8m in 2023. Consequently, Havering often had to increase its Council Tax or use its Reserves over the years and thus the former is the 4th highest in London and the latter is the 2nd lowest. Government funding is unlikely, especially given present economic conditions, to improve. *3
Whilst the borough’s funds have shrunk the demands have continued to rise. Over the last few years, Havering has seen an influx of children (see below) some of whom have complex needs requiring support. That can be eye-watering e.g., supporting one child in care can cost thousands of pounds a week. To compound the problem the Government refuses to use present day demographic statistics to calculate financial support but, for their own convenience, sticks with figures back to 2011. Thus, Havering receives far less than it should whilst other boroughs receive support for children they no longer care for.
A GROWING POPULATION BUT WITH INSUFFICIENT INFRASTRUCTURE
The total estimated population of Havering from the census in 2021 is 262,052 compared to 237,232 in 2011 (a 10.5% increase). Most of this is from people moving from inner London and, in particular, families i.e., the number of children aged 0-17 years old has risen from 50,827 in 2011 to 58,550 (a 15.2% increase). *4 The increase in children and an ageing elderly population has fuelled demand upon our shrinking finances without any extra Governmental support.
Of course, a growing population moving into new properties should increase Council Tax revenue. Unfortunately, monies towards providing new infrastructure e.g., GP surgeries, resurfaced roads, leisure facilities etc, to take into account the impacts of new developments and people, have been and will still be insufficient, as developer’s contributions towards such (a Community Infrastructure Levy) are calculated as being at least 60% short on all new builds. *5
LACK OF FAMILY HOMES
Havering’s Objectively Assessed Need (OAN) on housing mix i.e., bedroom sizes, indicates that we need more family homes (3+ bedrooms) than smaller ones. The borough’s present Local Plan, based upon the findings of the Outer North East Strategic Housing Market Assessment, confirms that we need far more 3+ bedroom properties e.g., 80% of new Market housing and 50% of new Affordable housing, than what is presently being provided. Over the last three years, only around 30% of all homes are family homes. Given viability or profitability issues e.g., since developers make more by delivering smaller units, our need is unlikely to be met anytime soon. *6
A LOW MEDIAN WAGE FOR THE BOROUGH’S EMPLOYEES
The gross weekly earnings of full-time workers in Havering are £709.10 compared to £765.40 in London as the hourly rate paid is lower (on average over 20%). *7
DENSE URBAN DEVELOPMENTS WITHIN ROMFORD AND BEAM PARK
In order to meet Mayoral housing targets (supported by Government) previous Havering Administrations sought to concentrate developments within Romford Town Centre and the new Beam Park (they were designated as Strategic Development Areas). To do so they were expected to absorb very dense developments e.g., usually via tower blocks with few houses with gardens.
LOSS OF VALUABLE GREEN SPACE
Inevitably, community spaces are being compromised in the pursuit of meeting housing targets. Valuable residential greens have been sold or eyed for development. Although new developments are supposed to include green spaces failure to do so can be ‘mitigated’ by financial contributions to improve other existing outside spaces.
LIMITED CONTROL OF RESOURCES
Most residents’ interaction with Council is limited and, unless they experience a particular service issue, is largely passive i.e., aware of its responsibility for cutting the grass, repairing the roads, cleaning the streets, libraries etc. In reality, Council’s also have a statutory responsibility for social services (supporting local residents in need, albeit it only involving a small minority).
Changing demographics and rising costs of such services have now increased the pressures upon Council finances to breaking point. Over 70% of Council finances is now spent on social services leaving an inadequate remainder to be spent across all the other services. Thus, the important services for the vast majority of residents are insufficiently funded.
PUBLIC TRANSPORT & WORK
Many suggest that Havering is an ‘outer-outer’ borough i.e., given its proximity from the Capital’s centre, that often gets overlooked by public bodies, especially those responsible for our bus and rail services. Although the borough’s east-west connections are reasonable, north-south links are difficult, time consuming to navigate and are poorly served by public services.
Whilst Havering does have one of the largest car ownerships only 39.5% use it to go to work and there are still a significant number who don’t own one, especially young employees or apprentices. Consequently, access to the Rainham Strategic Industrial Land (presently with room to grow/intensify), effectively relies upon owning a car. *8
THE THREAT
All these boroughwide weaknesses are in danger of turning Havering into becoming a ‘dormitory’ borough i.e., an increased population travelling outside for work (already only 17% travel less than 3 miles to work *8) with few new local jobs and those being relatively lowly paid. Overall, Council services will be limited, public transport will remain poor and housing insufficient, cramped & soulless.
THE SOLUTION: INWARD INVESTMENT
Given the economic fallout from COVID and inflationary pressures, increased central Government financial support is unlikely and biased formulas will ensure inner-London will continue to receive the lion’s share of any central funding. The solution to a lack of public sector funding must be a private sector one i.e., inward investment into Havering by private industry. Apart from direct benefits e.g., Increased income via business rates, increased purchases/supply from local businesses, and new well-paid jobs, it can act as a catalyst for other investors to invest within Havering and thus create a ‘virtuous circle’ helping solve the borough’s problems.
THE JIGSAW
For example, the proposed Data Centre nr Warley in Havering is a £5.3bn+ overall inward investment in the UK. The development would directly deliver Business Rates to Havering of some £13.548m (potentially £40m) per year. *9
It would also provide at least 2,800 local jobs in the construction period and 2,370 jobs ongoing thereafter, a skills legacy and substantial contributions to the borough’s GDP e.g., via using existing business to support the project throughout its construction and life. A potential spin-off, exploiting a DC’s heat, could be a District Heating Centre that could supply cheap energy to Havering’s residents.
VIRTUOUS CIRCLE
The resulting enhanced reputational image of the borough will also attract outside high-tech businesses thus increasing overall Business Rates, various financial investments and local jobs. A similar large investor could generate the same virtuous cycle.
Furthermore, the significant and varied R&D operations on the Data Centre site e.g., research to increase agricultural yields plus state-of-the-art vertical farming infrastructure, development of clean energy technology and cutting-edge de-toxification of landfills etc, will benefit locally and generate businesses in those new or enhanced disciplines and likely be based within Havering.
HIGHER PAID BUSINESSES
We would invite all such new businesses, to locate themselves within Havering, including Romford but also and in particular in the Strategic Industrial Land based in the Rainham area (it is the largest SIL within London). We will support the construction of physical infrastructure within that area to support start-ups and high-tech businesses.
We will continue to lobby TfL to provide public transport, including the promised Beam Park station, to and from that and other poorly served areas or find private partners to provide such.
The workforce(s) will likely be earning higher than the existing average Havering wage which will in turn increase the borough’s overall median rate and increase spend in our local economy.
FAMILY HOMES
These workforce(s) (plus existing residents) will also be attracted to the opportunity of settling in new family homes (Houses with gardens and valuable green spaces). This will also allow us to meet statutory Housing Targets without requiring the construction of further dense, high-rise flatted developments that largely accommodate single residents. The relatively new St. George’s site in Hornchurch is a ‘live’ example of a development which reflects suburban family living.
We should also ensure that those new development(s) would have the necessary infrastructure e.g., GPs, leisure facilities etc. rather than seeking to share existing and overused services.
Increased overall Council income via business rates can also be invested into existing more dense areas requiring ‘missing’ facilities e.g., road repairs and valuable Green residential spaces including a liberal use of trees and vegetation.
REGENERATING SHOPPING CENTRES
A regeneration of the borough’s shopping areas (online shopping not withstanding), partially funded by increased business rate income, will increase the spend/local economic growth within Havering thus maintaining and attracting new retail to those centres.
Romford, for example, will need a regenerated market with more planned retail development in the Centre than in recent times. A combination of attractive activities and events plus new residential development will attract new shoppers and spend thus expanding the retail offer and more shoppers in turn (its own virtuous circle).
THE JIGSAW
Thus, the pieces of the jigsaw to resolve Havering’s endemic problems are most likely found and kick-started via private finance. Successful businesses will not only improve council finances, local jobs, business suppliers and the borough’s GDP, but also attract similar or complementary businesses i.e., will ‘rinse and repeat’. It will not be an easy or quick solution to our financial woes and it will take some time and effort to deliver all the benefits of inward investment. Ultimately, however, it can change the borough from being relatively poor to becoming an affluent one.
References:
* 5 Havering Council acknowledged in an INFRASTRUCTURE FUNDING GAP REPORT (October 2018) when requesting for CIL to be adopted in 2019, that any such levy would be 60% short of what was required. https://www.havering.gov.uk/download/downloads/id/2885/cil-cd04_infrastructure_funding_gap_report.pdf
* 6 Havering Local Plan 2016-2031 (p.34) https://www.havering.gov.uk/download/downloads/id/5300/havering_local_plan_2016_-_2031.pdf
* 7 Labour Market Profile – Nomis – Official Census and Labour Market Statistics (nomisweb.co.uk)
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