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Havering Council faces cost pressures after £18m overspend in 2023/24

Havering Town Hall. Credit: LDRS

Havering Council overspent its budget by £18million last year as it faced increasing pressures on housing and social care.

(Written by Local Democracy Reporter, Sebastian Mann)

More and more children in care are requiring council support and the demand for housing is quickly outpacing supply, a council report shows.

The number of children requiring ‘complex support’ has doubled since April 2022 and there has been a “steady increase” of children going into care.

Though the council says it provided for this when setting the annual budget, a “sharp rise” in provider costs has worsened pressure on the council.

According to a report, presented to Havering’s cabinet on Wednesday (12th June), the council took the “full impact of these demographic pressures and further expected growth” into account when signing off the budget for 2024/25.

Havering has a statutory duty to look after vulnerable people, but says it will “do everything it can” to contain costs going forward.

This municipal year’s budget looked bleak for Havering. It exposed a black hole of £32.5m in the council’s finances, which will be plugged by cuts to services and the offer of a £54m loan from central government.

Due to the rising cost of housing in the borough – echoed across London – the council ended up housing residents in expensive hotels and bed-and-breakfasts, which was a further blow to its finances.

But despite last year’s performance, the council’s leadership says it is in a better position today than expected.

Chief executive Andrew Blake-Herbert added: “We will absolutely, only undertake borrowing at the point we need to do it, and not before. We do not want to incur those interest costs.

“This is an improved position on where we were.”

Kathy Freeman, who oversees the council’s finances, said she was receiving weekly updates on the treasury and was monitoring its activities “really closely”.

During the meeting, members also heard that 79% of the council’s expenditure goes on social care.

Deputy leader Gillian Ford said it appeared to be “increasing” and was putting a “huge pressure” on the council’s coffers. She added: “Things are not getting any easier.”

Chris Wilkins, the cabinet member for finance, said that while the council was facing “large challenges,” he was optimistic the beleaguered authority would “get there”.

During the same meeting, the cabinet approved a scheme to establish a new subsidiary company that will purchase homes on the open market for the council to use as social housing.

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