Havering Council faces £32m budget shortfall after Covid-19

Havering Town Hall

Havering Town Hall - Credit: Ken Mears

Havering Council is predicted to have a £31.9million hole in its budget by 2023, it has confirmed. 

The shortfall would give Havering one of the worst budget black holes in the country. 

With an annual net revenue budget of £168.5million, the shortfall in the financial year 2023/4 would amount to 18.9 per cent of its annual budget. 

That would make it the tenth-worst budget gap in a ranking of 120 upper tier local authorities who supplied their figures to the BBC. 

But the authority told the Romford Recorder: “We are in a good position to make savings if there are further pressures around grant cuts and we fully expect to balance our budget each year, as we have done in the past.” 

Why is there a gap? 

Since 2010, government has pursued a policy of austerity, reducing councils’ central funding grants and encouraging them to generate their own income. 

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Even before the Covid-19 pandemic, there was a £6.4bn gap between UK local authorities’ spending obligations and their incomes. 

Coronavirus meant councils faced a double whammy of huge extra costs for things like housing the homeless and organising test and trace programmes, and diminished income from commercial investments like offices and car parks. 

A Havering Council spokesperson said the authority had “set a balanced budget” for this year, but had forecast a £31.9m gap “to be closed” by 2023/4. 

What can Havering do? 

The council said all London boroughs who had supplied their data to the BBC had “forecasted significant gaps”. 

It said this may be in part due to a government “levelling up” scheme, which will see money redistributed away from the capital. 

Havering said it had an “ongoing process to modernise and continue to develop better solutions for delivering services to residents.” 

"The shortfall is a realistic position of the actions the council might well have to take,” a spokesperson told the Recorder. 

“Even with potential further grant cuts, the council will continue to deliver high quality services to meet the needs of our residents and will only ever increase council tax as a last option.”