Havering’s Borrowing Is Rising — But How Much Is The Borough REALLY Paying In Interest?

23rd September 202623rd September 2026 Francesca Lilleystone 0 Comments Finance, Havering Council, Interest, Loans min read

Havering has had to borrow more money to help get through its financial pressures because the money coming into the Council has not been enough to cover all of the costs it faces. But borrowing money comes with another cost: interest. So what does that actually mean for Havering residents?

Put very simply, the Council has money coming in, but it has also got bills and services that have to be paid for.

When the money available is not enough to cover those costs, the Council can seek Government Exceptional Financial Support and borrow money.

But that is not the end of the story.

The money borrowed has to be paid back.

And while that money is being borrowed, interest has to be paid on it.

It is a little like taking out a mortgage.

If you borrow £100,000, you eventually have to repay the £100,000, but you also pay interest to the lender.

The same basic principle applies to Council borrowing.

So, in very simple terms:

Not enough money coming in → money has to be borrowed → interest is charged → the Council has to find money to pay that interest → the original borrowing also has to be repaid.

That means the original financial gap can create another financial cost for future years.

Havering’s latest figures show that the Council has applied for £136 million of Exceptional Financial Support.

Of that amount, £108 million is forecast to have been used by the end of the 2025/26 financial year.

But the cost to Havering does not stop at £108 million.

The Council says this borrowing is expected to create an ongoing cost of around £11 million a year to finance the debt.

And the figures are expected to rise.

By 2028/29, Havering expects its Exceptional Financial Support debt to have reached around £338 million.

The Council estimates that financing this debt could then cost around £32 million every year.

It is important to make clear that the £32 million is not interest alone. It includes interest as well as money the Council has to set aside towards repaying the borrowing.

There is also the wider cost of Havering’s debt.

During 2024/25, the Council paid £16.6 million in interest on its debt.

That £16.6 million was the cost of borrowing money during that financial year. It does not simply reduce the amount originally borrowed.

So why does this matter?

Because when a Council does not have enough money to cover its financial commitments and has to borrow, the borrowing can create a further cost that has to be dealt with in future budgets.

The original money helps meet the immediate financial pressure.

But the interest and repayment costs remain.

There is therefore a very simple reality behind Council borrowing:

The money is borrowed today, but the financial commitment follows the Council into future years.

Residents may hear figures running into hundreds of millions of pounds when Council borrowing is discussed.

But the real picture is more than the amount borrowed.

There is the money borrowed.

There is the interest charged on that borrowing.

And there is the money that has to be set aside to repay it.

The Council’s own figures show that Havering’s Exceptional Financial Support debt could reach around £338 million by 2028/29, with estimated financing costs of around £32 million a year.

In simple terms, borrowing can help a Council deal with a financial shortfall today, but it means future Council budgets have to carry the cost of that decision.

A loan may provide the money needed today, but the bill for that borrowing is carried into future years.

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