Newham Council is facing a significant financial challenge, with a projected £115 million budget shortfall by 2029. Key factors contributing to this shortfall include rising social care costs, increasing demand for services, population growth, inflation, and expenditure on temporary accommodation.
The council plans to launch a public consultation to gather residents' views on service priorities as it grapples with this difficult financial outlook. The consultation aims to help the council determine which services should be prioritised, acknowledging that service reductions are possible across various departments.
The Newham Council Cabinet reviewed the financial situation at a meeting on Tuesday, July 22, 2025, and agreed to proceed with the consultation. According to the July Finance Review, the council faces considerable uncertainty around future cost pressures, despite a slight improvement in the financial forecast due to reduced temporary accommodation costs.
Councillor Zulfiqar Ali, Deputy Mayor and Cabinet Member for Finance and Resources, and Environment, emphasized the need to scrutinise government announcements and make necessary adjustments to mitigate the £115 million shortfall. He noted that while incremental improvements are helpful, they are not sufficient to address the underlying financial challenges.
Conrad Hall, Corporate Director of Resources, highlighted the potential for significant changes in funding distribution for local authorities following a government funding review. The consultation for the government funding review has a deadline of August 15th, and the council expects to have a draft budget in December/January after the local government plan is set in late November. While the initial assessment suggests a potential £30 million increase for Newham over the next three years, Hall cautioned that this is subject to change and that the council's population has grown substantially, according to 2025 data from the Office for National Statistics, from 350,000 in 2021 to 386,000.
The cabinet also noted the council's commitment to reducing the budget gap through savings, including zero-based budgeting.
The need for a public consultation comes as the council also responds to a non-statutory best value notice from the Ministry of Housing, Communities and Local Government (MHCLG). The notice, issued on May 8, 2025, was triggered by:
- Significant value for money weaknesses around the council's governance arrangements, highlighted by the external auditor in the annual report published on 20 February 2025.
- Cultural and governance issues identified in a scrutiny improvement review by the Centre for Governance and Scrutiny in 2023, and the LGA's Corporate Peer Challenge completed in December 2023 and subsequent progress review in October 2024.
- Significant delivery concerns about some of the programmes delivered by the authority, particularly following the Regulator of Social Housing C4 grading published in October 2024.
Paul Martin, the new interim chief executive, stressed the importance of teamwork to address the issues raised, which he said were a crystallisation of what was already known.
Councillor Amar Virdee, Statutory Deputy Mayor and Cabinet Member for Housing Needs, Homelessness and Private Rented Sector, highlighted the importance of transparency and openness regarding the best value notice and the need to demonstrate improvements to residents. Councillor Zulfiqar Ali said that the council aimed to have the notice withdrawn within 12 months.
The cabinet also reviewed the transformation, improvement, and performance report for 2024-25, noting progress made in delivering the Building a Fairer Newham plan and the Transforming Newham for the Future plan. Councillor Rita Chadha, Cabinet Member for Transformation, highlighted the integrated nature of the report and the clear explanations of areas needing improvement. The cabinet agreed to the new key performance data targets for 2025-26.
