Havering Council has significantly bolstered its financial reserves, reporting an underspend of £37.7 million for the 2025/26 financial year. This positive financial outturn, which is £50.3 million less than initially feared, has been attributed to stringent cost controls and effective financial management across various council departments.
The Council's Cabinet reviewed the Revenue and Capital Outturn Report for 2025/26, which highlighted the substantial improvement in the council's financial position. Councillor Sue Benjamins, Deputy Leader of the Council and Cabinet Member for Finance, presented the report, noting that the need for exceptional financial support had been reduced from an anticipated £88 million down to £37.7 million.
Key measures contributing to the underspend included a recruitment board scrutinising all new appointments, a review and reduction in agency expenditure, and tighter controls on purchase card usage. Panels were also established to review social care placements, leading to cost reductions, and joint working with health partners ensured appropriate cost-sharing. Existing and forthcoming contracts were also reviewed to drive efficiency and secure better terms.
Specific underspends were noted across directorates. The People Directorate underspent by £3.72 million. Within 'Starting Well', costs were reduced due to a combination of holding staff vacancies, reduced expenditure on Section 17 financial assistance to families, and improved forecasting. Reduced realised spend against forecast in Home to School transport and S17 Children in need spend also contributed. For 'Ageing Well', costs were reduced due to the implementation of a market strategy that led to rate acceptance and steadier demand from providers. This commissioning process, involving the annual negotiation of charges with providers, is a key part of the Council's strategy in ensuring value for money. The 'Leaving Care' service also saw reduced expenditure due to management action around reviews and spending panels. However, Living Well experienced an overspend of £1.95 million due to high-cost transition cases and increasing client complexity in Learning Disabilities, with complexity pressures continuing to be an area of concern. Partially offsetting this was underspends in Temporary Accommodation.
The Place Directorate underspent by £5.06 million, primarily driven by increased parking income. This increase was due to a London-wide decision to increase Penalty Charge Notice (PCN) charges, which commenced in April 2025, alongside a slight increase in the number of PCNs and Moving Traffic Contraventions issued. Planning also generated additional statutory fees income, and Housing and Property saw underspends due to held vacancies and additional income.
Corporate budgets showed a significant underspend of £23.7 million. This was largely due to favourable treasury management outcomes, including a £3.3 million underspend on 'Interest Payable' as the council financed spend through internal borrowing, avoiding further external borrowing. A £1.0 million underspend on 'Minimum Revenue Provision' was also noted due to slippage in the capital programme. Additionally, there was a £3.5 million underspend related to 'MRP and Interest due on EFS'. The release of contingent items, including £1 million and budgets related to Business Rate underindexation and IT, also contributed to the underspend as these were deemed not needed for 2025/26 and were released on an ongoing basis. A balance sheet review identified and wrote back historic suspense items and unmatched receipted credits, contributing £4 million to the corporate underspend. These were old, unresolved financial entries whose accumulation reasons are not detailed.
The Housing Revenue Account (HRA) recorded an underspend of £4.34 million, with a net underspend on treasury management of £3.9 million within the HRA being a notable contribution, alongside underspends in treasury management and reduced void loss.
More details on the council's financial performance can be found in the Public reports pack for the Cabinet meeting on 8th July 2026.
