Havering Council to Review Capital Programme Amid Financial Pressures and Savings Shortfalls

Havering Council is set to urgently review its capital programme, including schemes undertaken by its companies and partnerships, in light of increasing financial pressures, as revealed at the Overview & Scrutiny Board meeting on 9 October 2025.

The council faces significant financial challenges, including a projected £88 million capitalisation direction, and is seeking to identify schemes that can be delayed or withdrawn as a matter of urgency. The budget for 2025/26 was balanced using this £88.0m capitalisation direction, provisionally agreed with the Government in February 2025. The review comes as the council grapples with delivering £10.254m of savings agreed as part of the 2025/26 budget.

According to the Savings Report, £4.838m of these savings are classified as green, meaning they are either already delivered or fully on track. However, £3.743m are classified as amber, indicating they are not yet fully delivered but could still be achieved, while £1.673m are classified as red, meaning they are not on track or are delayed and unlikely to be delivered in 2025/26. Where savings will not be delivered, departments will firstly look to identify alternative measures to keep within budget but will also report through the monitoring process any shortfall in savings. This will then be picked up and included in both the Councils projected outturn position and also medium term planning moving forwards.

Several savings are facing difficulties, which could impact services provided to residents. The following savings, classified as 'red', are unlikely to be delivered in 2025/26:

• £0.3m from acquisition of property jointly to relieve temporary accommodation pressures, with the majority of this saving now likely to be realised in 2026/27.
• £0.5m from transition savings (adults), with the report stating that this saving is unlikely to be achieved in 2025/26.
• £0.18m in housing demand savings, relating to modular units which are now unlikely to be onsite until January 2026 at the earliest, as such the saving will be delayed to 2026/27.
• £0.466m from the Family Welcome Centre, with the centre scheduled to open in April 2026, so the saving will be delayed to 2026/27.
• £0.2m from in-sourcing family support, with delays to the implementation of this move to an in-house service.

The council's Improvement and Transformation Plan outlines a number of actions to address CIPFA recommendations, including a full review of the capital programme. These recommendations include:

• The Council should undertake a formal review against the CIPFA financial management code
• That the council increases its investment in preventive services via invest-to-save approaches with sound business cases, monitored rigorously.
• That the May 2024 Starting Well Improvement Plan remains subject to strong monitoring and governance arrangements as a key priority for the Council.
• Develop market position statements, supported housing strategies, and new approaches to commissioning.
• During the course of our review it was apparent this risk has materialised. The council will need to enter into a dialogue with Government into a way forward on its future funding.
• It is recommended that the council undertake a full review of the capital programme, including schemes undertaken by its companies and partnerships, with a view to seeing if schemes can be delayed or withdrawn as a matter of urgency
• The council should consider the merits of setting up such a board
• The council should review and consider whether this arrangement is appropriate.
• The MLH Business Plan should be reviewed annually, and this should be included in the shareholder agreement.
• The council should review the content of financial information in reports so that actual costs and schemes or service budgets are directly referred.
• The council should ensure that the necessary resources are secured to deliver the required transformation agenda.
• The council should review its contract procurement rules, roll out training, and create a forum to share best practice.

The plan also details progress in areas such as reducing wasteful spend, improving transformation and service delivery, and enhancing technology and innovation.

The Budget Savings Update presented to the board provided a breakdown of the savings by department:

• People Services: £0.593m green, £3.173m amber, £1.646m red.
• Resources: £0.730m green, £0.070m amber.
• Place: £0.070m green, £0.027m red.
• Corporate: £3.445m green, £0.500m amber.

The council's financial challenges are compounded by years of underfunding from central government, particularly in social care. The S151 Officer and the Chief Executive liaises with colleagues at MHCLG on a monthly basis, providing updates regarding the Council's financial position, progress on delivery of savings, challenges the Council faces due to additional burdens and the impact of wider public sector changes and its impact on Havering. The council is currently reviewing its 2026-2029 medium term financial strategy. An update to this strategy will be reported to cabinet in November and will include both a further update on the 2025/26 revenue position together with new efficiencies and proposals for both 2026/27 and future years.