{"id":6955,"date":"2025-08-15T13:27:00","date_gmt":"2025-08-15T13:27:00","guid":{"rendered":"https:\/\/sandbox.hbmadvisory.com\/amplify\/havering-warns-it-may-need-an-18m-contingency-after-early-1m-shortfall\/"},"modified":"2025-08-15T13:40:58","modified_gmt":"2025-08-15T13:40:58","slug":"havering-warns-it-may-need-an-18m-contingency-after-early-1m-shortfall","status":"publish","type":"post","link":"https:\/\/sandbox.hbmadvisory.com\/amplify\/havering-warns-it-may-need-an-18m-contingency-after-early-1m-shortfall\/","title":{"rendered":"Havering warns it may need an \u00a318m contingency after early \u00a31m shortfall"},"content":{"rendered":"

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Havering Council projects a \u00a31m overspend after quarter one, with mounting pressures in housing and adult social care and the possibility of drawing on an \u00a388m capitalisation direction and an \u00a318m worst\u2011case contingency to remain solvent.<\/p>\n

Cash\u2011strapped Havering Council is already forecasting a budget overspend for the current financial year, projecting a \u00a31 million shortfall after the first quarter and warning that it may need to draw on an \u00a318 million \u201cworst\u2011case\u2011scenario\u201d contingency to remain solvent. According to the council\u2019s latest report, pressures are concentrated in housing and adult social care, while the authority\u2019s overall budget for the year, including contingency, stands at about \u00a3292 million.
\nThe report cautions the outlook is precarious and that risks will be closely monitored as the year progresses. <\/p>\n

The first\u2011quarter projection breaks down into a potential \u00a31.8 million overspend on housing and \u00a32.3 million on adult social care, with a further \u00a31.1 million pressure on the council\u2019s \u201cageing well\u201d programme and \u00a31.5 million against resources. The document also flags a shortfall arising from temporary accommodation: the council expects 23 families to enter costly hotel or B&B placements in September, a move it estimates will add roughly \u00a3500,000 to housing costs. Offsetting some of these pressures, planners report a projected \u00a33.7 million underspend against the \u201cplace\u201d portfolio, helped by additional income that includes an extra \u00a31.5 million generated after increasing fixed\u2011penalty notice charges. <\/p>\n

These latest projections sit on the back of significant, recent overspends. Last year Havering exceeded its housing budget by \u00a36.6 million and its wider \u201cpeople\u201d budget \u2014 which covers social care and children\u2019s services \u2014 by more than \u00a320 million. Council financial returns for 2024\/25 show services overspent by around \u00a321.6 million and a total variance of about \u00a330.4 million against the original budget before exceptional support measures were applied. The outturn appendix makes clear that a capitalisation direction was used to manage those gaps, and that a central contingency pot was held in reserve for emerging risks. <\/p>\n

The authority\u2019s fiscal squeeze has already attracted central government intervention. In February the government authorised a package of exceptional financial support that allows a number of councils, including Havering, to access up to roughly \u00a388\u201389 million to manage acute pressures. The council says the funding can be drawn down as required and will operate similarly to a line of credit. The government framed the measure as a partnership with councils facing acute strain, while local government bodies have warned such short\u2011term support risks entrenching long\u2011term indebtedness unless structural reform follows. <\/p>\n

Havering\u2019s elected leadership has sought to formalise a path through the crisis. In approving its 2025\/26 budget the council agreed a 4.99% rise in council tax, a 2.7% uplift in fees and rents, and the use of an \u00a388 million capitalisation direction as contingency against a worst\u2011case scenario. The budget package \u2014 carried through in a narrow vote \u2014 also included proposals to close three libraries as a cost\u2011saving measure, a move that proved politically controversial and was approved by a single vote at a council meeting in February. Council leaders stress the choices were intended to avoid still larger council\u2011tax increases while they continue to press for reform of the funding formula from central government. <\/p>\n

Temporary accommodation costs remain a particularly acute pressure. Local reporting shows the council spent more than \u00a3560,000 on hotels and B&Bs in a single year as homelessness placements surged, with projections for the total to exceed \u00a3700,000. Inspectors and councillors say families have sometimes remained in nightly lets beyond the statutory short\u2011term expectation, driving both human distress and expense. The authority has set out plans to build a 74\u2011unit hostel and continues to lobby ministers for additional resources to reduce expensive nightly placements. <\/p>\n

The pattern in Havering reflects wider themes across London and elsewhere: rapidly changing demographics, increasing demand for social care and temporary housing, and what councils describe as long\u2011standing underfunding from central government. The government\u2019s intervention was presented as a necessary, short\u2011term stabiliser; critics including regional local\u2011government bodies have cautioned it is not a substitute for the kind of sustained funding reform many boroughs say is needed. The council\u2019s own report states it is \u201ccurrently in a period of intense financial pressure as a result of long\u2011standing government underfunding at a time of rapid demographic change and growth,\u201d and adds that \u201cwith no substantial change to funding arrangements for 2025\/26, while the population continues to grow, this unsatisfactory situation has persisted.\u201d <\/p>\n

For now, Havering\u2019s finance team says the forecast will be closely watched over the coming months and that figures remain subject to change. The council points to management actions already taken \u2014 including the closure of three libraries and cuts to cultural spending such as town\u2011centre Christmas lights last winter \u2014 as part of a broader package aimed at stabilising its finances while it seeks longer\u2011term relief from central government. <\/p>\n

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