£40m saved — but why is Havering still facing a £77m gap?

Havering Council is projecting a £77 million budget gap for 2026/27, despite delivering around £40 million in savings over the past four years. So where does that leave the borough financially?

Council officers have described the financial position as challenging but improving compared to earlier forecasts. The projected gap for 2026/27 is said to be slightly better than previously expected, although medium-term pressures remain.

The council is set to issue its third Capitalisation Direction for 2026/27. This is a Government mechanism that allows councils to use capital resources to support revenue spending in exceptional circumstances.

Where the money goes

More than 70% of Havering’s budget is spent on:

• Adult Social Care
• Children’s Social Care

These services are statutory, meaning the council is legally required to provide them regardless of financial pressures.

That leaves less than 30% of the remaining budget to fund visible neighbourhood services such as:

• Roads and highways
• Parks
• Street cleansing
• Rubbish collection
• Libraries and community facilities

Havering has one of the oldest populations in London, which places sustained demand on adult social care services. Increasing need continues to be a significant cost driver.

Savings and debt

Over the past four years, approximately £40 million in savings has been delivered. Officers have indicated that further efficiencies are being explored and that the council continues to review how it operates.

The figure of £93 million referenced in discussions relates to debt financing costs within financial planning projections. The council is not currently servicing £93 million of debt repayments as a standalone annual liability, but financing costs form part of the longer-term financial picture.

A 4.99% Council Tax increase is included within the financial modelling.

The road ahead

Medium-term projections indicate continued gaps in future years, potentially rising beyond £80 million if structural pressures remain.

Council leadership has said it continues to engage with Government around funding reform and financial sustainability. Officers stress that the focus remains on maintaining statutory services while seeking efficiencies elsewhere.

At present, Havering is not in a position of declared financial failure. However, the scale of the projected gap highlights the continuing strain on local government finances across London and beyond.

For residents, the central issue remains the balance between rising demand for legally required services and the funding available to deliver them.

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