Havering Council Forecasts £22.8m Underspend After Years Of Financial Pressure
By Sebastian Mann, LDRS
Havering Council says it will not go over budget for the first time in three years, but will rely on financial support from the government.
Based on figures from the end of June, council is expecting to underspend by a total of £22.8million and may not need to rely on its £11m contingency put aside for the worst case scenario.
After taking over the Havering Residents Association in May, council leader Keith Prince’s Reform group says stabilising the town hall’s finances is a top priority.
However, in order to keep to this level, Havering will need to use £54.2m of ‘exceptional financial support’ – a loan provided by the central government.
The east London authority was given the bailout in February, with financial chief Kathy Freeman warning Havering was “not in a financially stable position” and would “more than likely” need to borrow more in the future.
Exceptional financial support is not a lump-sum loan. Instead, it functions as a line of credit that councils can draw from as and when they need – in Havering’s case, it will need to draw the full amount.
The eight-figure loan will be paid back over the next 20 years, at the fixed interest rate set by the Public Works Loan Board plus 1% – equating to an extra £2.1m burden for the council.
Over the past three years, it has borrowed around £237m to pay for the ballooning costs of temporary accommodation and social care.
Residents facing homelessness are commonly owed a house duty by their local council, which means the town hall will find them settled accommodation to keep them off the streets.
Currently, Havering is expecting to cut temporary accommodation spending by £1m as council officers work to prioritise long-term housing and move away from expensive, nightly hotels.
It is set to overspend on its people services – which includes social care – by around £6m, but this will be mitigated overall by savings elsewhere.
Meanwhile, its place directorate – which oversees housing among other sectors – is forecasting a narrow underspend of £300,000. The planning department is £100,000 under budget due to the increased cost of planning fees being paid by developers.
The report outlining the council’s financial position is due before top councillors in the cabinet next week.
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