Havering Council is grappling with a budget shortfall despite forecasting an underspend in the first quarter of the 2025/26 financial year, according to a recent cabinet meeting. The council has applied for Exceptional Financial Support to prevent them from issuing a S114 for last financial year (2024/25) due to significant systemic underfunding since 2010, according to the Improvement & Transformation Plan Progress Update and CIPFA FM Review.
At a Cabinet Meeting on Wednesday 13 August 2025, Havering Council reviewed its financial performance for the first quarter of the 2025/26 financial year. While the council is forecasting an underspend of £1.0m against its budget of £292m, this figure includes the use of Exceptional Financial Support. To address the shortfall, the council is also focusing on maximising council tax income, selling assets, seeking savings and efficiencies, and implementing an Improvement & Transformation Plan.
Councillor Ray Morgon, Leader of the Council, highlighted the ongoing financial challenges, stating that Havering remains the forgotten borough
due to persistently low core grant funding from central government. He stated that Havering's core grant remains as one of the lowest in London.
Several factors contribute to the financial strain. The report noted that £11.3m of funding being held centrally will be transferred to Ageing Well (£7.6m) and Living Well (£3.7m) to meet ongoing demographic pressures. The report also identified key challenges for 2025/26, including social care service increases, children in care costs, SEND needs, and the implementation of separate food waste collections. The Corporate Plan Annual Performance Report 2024/25 mentions that the separate food waste collections will cost the council £3.2m, with the Department for Environment, Food and Rural Affairs (DEFRA) allocating £1.9m, leaving a shortfall of £1.3m. The council will also be required to pay £2.725m per year in revenue costs to run the service, and is lobbying the Government for funding for this project.
Despite the underspend, the council faces several financial risks, including potential shortfalls in income achievement within Ageing Well (£0.8m) and the potential need to utilise contingency funds for decanting families from regeneration estates (£0.5m) and home to school transport (£0.6m). The 2024-26 1st Quarter Revenue and Capital Monitoring report mentions that 23 families are at risk of having to move out of properties and into nightly charged from Sep due to decanting from regeneration estates, with potential long-term costs of £0.5m.
