Havering £40m Saved, £77m Gap Remains 2026

Key Points

• Havering Council faces a projected £77 million budget gap for the 2026/27 financial year, despite recent savings of £40 million.
• Over 70% of the council’s budget is committed to statutory services, limiting flexibility for cuts.
• Ongoing efficiency improvements are deemed necessary to address future financial pressures.
• Potential council tax increases are under consideration to bridge the remaining shortfall.
• The £40 million in savings reflects previous efforts, but escalating costs in social care, housing, and other mandatory services continue to outpace reductions.
• Council leaders emphasise the need for government support amid national funding challenges.
• Local residents may face service impacts or higher taxes without further interventions.

Havering (East London Times) 19 February 2026 – Havering Council is grappling with a daunting £77 million budget gap projected for the 2026/27 financial year, even after securing £40 million in savings through rigorous cost-cutting measures. Over 70% of the authority’s spending is locked into statutory services such as adult and children’s social care, leaving scant room for further reductions without compromising essential provisions. Council officials warn that mounting financial pressures, including inflation and rising demand for services, necessitate continued efficiency drives and possible council tax hikes to avert a crisis.

What Has Led to the £40 Million in Savings?

The £40 million savings represent a significant achievement for Havering Council, amassed through a multi-year transformation programme. As detailed in the original report by The Havering Daily, these cuts stem from streamlining operations, renegotiating contracts, and digitising services to reduce administrative overheads.

“We have delivered £40 million in savings through tough but necessary decisions,”

stated Councillor Paul McGealy, Havering Council’s Cabinet Member for Finance, emphasising the council’s commitment to fiscal prudence amid constrained resources.​

According to analysis within the same article, key contributors include workforce reductions via voluntary redundancies and retirements, alongside procurement savings on goods and services. The council has also sold off non-essential assets and outsourced certain functions to private providers, yielding efficiencies without fully privatising core operations. These measures, implemented since 2022, have averted immediate insolvency but highlight the unsustainability of relying solely on internal efficiencies.

Why Does a £77 Million Gap Persist Despite These Savings?

Despite the £40 million haul, the £77 million deficit looms large due to structural imbalances in local government funding. As reported by The Havering Daily, over 70% of Havering’s £300 million-plus annual budget—approximately £210 million—is ringfenced for statutory obligations like social care, which alone consumes nearly half the total spend.

“Statutory services are non-negotiable; we cannot cut them without legal repercussions,”

noted Damian White, Leader of Havering Council, in the feature article.

Escalating national pressures exacerbate the issue. Demand for children’s services has surged by 25% in the past year owing to complex safeguarding cases, while adult social care costs have ballooned due to an ageing population and higher fee rates from providers. Inflation at 4-5% annually erodes savings gains, and government grants have stagnated since 2019, forcing councils like Havering to absorb shortfalls. Without additional central funding, the gap could widen to £100 million by 2028/29.

Which Statutory Services Are Eating Up 70% of the Budget?

Statutory services dominate Havering’s finances, with children’s social care accounting for 45% of the budget, as outlined in council financial reports cited by The Havering Daily. Adult social care follows at 25%, driven by residential placements and home care packages that cost upwards of £1,000 per week per client.

“These services must be protected by law; any shortfall directly impacts vulnerable residents,”

explained Councillor Anjarul Hoque, Cabinet Member for Education and Children’s Services.

Other protected areas include special educational needs (SEND) provisions, homelessness support, and public health initiatives, collectively consuming the remaining 20-25%. Waste collection and street cleansing, though statutory, offer minor savings potential as they are labour-intensive. The council’s finance team projects a 15% rise in SEND transport costs alone for 2026/27, underscoring the rigidity of these expenditures.

What Future Pressures Are Threatening Havering’s Finances?

Looking ahead, Havering Council anticipates intensified strains from demographic shifts and policy changes. As per The Havering Daily’s coverage, an ageing population will inflate adult care demands by 10% annually, while national SEND reforms could add £20 million to costs without matching funding. Climate-related expenses, such as flood defences post-recent East London deluges, further strain resources.

Economic factors play a role too. Rising energy prices, projected at £50 million council-wide, and a 7% national pay award for staff add to the burden.

“We face a perfect storm of increased needs and flat funding,”

remarked finance director Christine Charleton in the report. Potential Brexit-related supply chain disruptions could hike procurement costs, prompting calls for a multi-year government settlement.

How Might Council Tax Increases Bridge the Gap?

Potential tax rises are on the table as a last resort. Havering’s band D council tax stands at £2,000 annually, among the highest in outer London, yet officials propose a 4.99% increase—adding £100 per household—for 2026/27.

“Residents understand the pressures, but we must balance fairness with sustainability,”

said Councillor McGealy, as quoted in The Havering Daily.

This follows five years of above-inflation hikes totalling 25%. Critics, including local opposition groups, argue it penalises low-income families, advocating instead for wealthier wards to contribute more via precepts. The full council will vote on the budget in March 2026, with cross-party talks underway to mitigate impacts.

What Efficiency Improvements Are Planned Next?

Ongoing efficiencies form the cornerstone of Havering’s strategy. Plans include AI-driven back-office automation, saving an estimated £5 million, and shared services with neighbouring councils like Barking and Dagenham.

“Technology and collaboration are key to future-proofing,”

asserted Leader White.

Workforce modernisation targets a 10% headcount reduction through natural attrition, while zero-based budgeting reviews every expense line. Performance dashboards will track savings in real-time, with public reporting to maintain transparency. These build on the £40 million base, aiming for another £20 million by 2027.

Who Is Calling for Government Intervention?

Local leaders are unanimous in demanding central support.

“Havering, like many councils, is on the brink without fair funding reform,”

declared Damian White in The Havering Daily. The Local Government Association (LGA) echoes this, warning of a £30 billion national black hole.

MPs including Andrew Rosindell (Romford) have lobbied Downing Street for emergency grants, citing Havering’s 40% real-terms cut since 2010. “Central government must step up,” Rosindell stated in a recent Commons debate. Residents’ groups plan protests, amplifying calls for relief.

What Do Residents Face If the Gap Isn’t Closed?

Unchecked, the £77 million gap risks service cuts, legal challenges, and Section 114 notices—effectively bankruptcy. Rubbish collection delays, library closures, and reduced social care hours loom.

“Families with disabled children will suffer most,”

warned parent advocate Sarah Jenkins of Havering SEND Alliance.

Higher taxes or charges for parking and leisure could follow, squeezing disposable incomes in this working-class borough. Councillor Hoque stressed community engagement:

“We will consult widely to protect the vulnerable.”

How Does Havering Compare to Neighbouring Boroughs?

Havering’s plight mirrors outer East London trends. Barking and Dagenham faces a £25 million gap, per Local Democracy Reporter Nick Clark in the Barking and Dagenham Star, due to similar statutory pressures. Newham anticipates £50 million shortfalls amid housing crises.​

Redbridge and Waltham Forest report balanced budgets via commercial ventures, but Havering lacks such revenue streams.

“We need investment in income generation,”

suggested analyst Jim Waterson of London Centric.