Key Points
- The UK government announced a £73 billion funding package for local authorities.
- Local Government Secretary Steve Reed called it “a chance to turn the page on a decade of cuts.”
- Some council leaders, including Havering’s Ray Morgon, criticised the formula used for allocations as “outdated.”
- Havering Council will receive £83 million more over the next three years, but part of it depends on higher council tax.
- Havering’s demographics show both rapid ageing and fast-growing youth populations, increasing service pressures.
- The council has borrowed nearly £100 million across two financial years to maintain core services.
- The settlements have sparked varied responses from councils across north-east and east London.
What has the government announced about council funding?
As reported by The Yellow Advertiser, the UK Government confirmed last week a total of £73 billion in funding for local authorities nationwide. This allocation, which will form the backbone of councils’ annual budgets, is to be finalised in February 2026 alongside projected income from council tax.
Announcing the plans, Local Government Secretary Steve Reed said the settlement offered a “chance to turn the page on a decade of cuts” and would “ensure every community has the funding they need to succeed.” Reed emphasised that the new funding marks a change in approach after years of austerity, promising to prioritise local services such as libraries, youth centres, clean streets, and community hubs.
“This is about investing in getting back what has been lost,”
Reed stated during his announcement.
“We want local leaders to have the tools to deliver and rebuild the sense of pride in place.”
How have local leaders in London responded?
Despite the positive rhetoric, responses from borough leaders across north-east and east London have been divided. Councils that have faced consistent budget shortfalls in recent years argue that while the increase is welcome, the funding formula, created in 2010, no longer reflects modern demographics or local needs.
Councillor Ray Morgon, leader of Havering Council, told The Yellow Advertiser that while the borough was set to receive an extra £83 million over the next three years, much of this figure comes from local rather than central government sources. Morgon stressed that £35 million of the projected boost would be raised through council tax increases, effectively shifting the burden onto residents.
“The announcement comes as too little too late,”
Morgon said.
“Residents have to foot the bill, not the government.”
Why is Havering calling for a fair funding deal?
Havering Council, governed by a minority administration of Havering Residents Association (HRA) councillors, has consistently argued that its financial pressures are distinct from those of other London boroughs due to its rapidly changing population profile. Morgon delivered a petition to Downing Street demanding fairer treatment for the borough, backed by local residents.
Speaking after the handover, Morgon said:
“The current funding we receive does not reflect these realities, leaving us struggling to provide the support our residents need. That’s why we have delivered our petition today. It is a clear message from our residents that the government needs to give us a fair deal so we can continue to provide vital services that matter to the borough.”
According to figures cited by Morgon, Havering’s population represents one of London’s most striking demographic shifts—boasting the second largest elderly population and among the fastest-rising youth populations in the UK. Both ends of that age spectrum create significant demand for public services, from adult social care to school placements.
How much financial pressure is Havering under?
Over the past two years, Havering Council has been forced to borrow extensively to maintain frontline services.
The Yellow Advertiser reported that the borough borrowed a combined £100 million — £71 million for the current financial year and £32.5 million earmarked for 2024/25.
These figures underline the council’s ongoing struggle to balance budgets amid inflationary pressures and increasing social care demands. Morgon and other borough leaders have noted that statutory services, particularly adult social care and children’s services, consume a growing proportion of available funding, leaving little flexibility for community projects or infrastructure renewal.
Are other councils facing similar concerns?
Havering’s frustrations reflect a broader unease shared among councils across the region.
According to coverage in The Guardian and BBC London, several other east London councils—including Barking and Dagenham, Newham, and Redbridge—have voiced similar worries about the adequacy and fairness of their allocations.
Councillor Darren Rodwell, leader of Barking and Dagenham Council, told BBC Radio London that the current settlement left them “struggling to meet demand despite efficiency savings.” He noted that rising housing pressures and social care costs have outpaced government support, eroding the borough’s ability to invest in regeneration and community services.
Meanwhile, Newham Council Leader Rokhsana Fiaz was quoted by The Guardian expressing concern that the formula favours rural and more affluent areas:
“Urban boroughs like ours, where deprivation levels remain high, continue to receive less than we need to deliver on social commitments.”
What is the government’s defence?
In response to such criticism, a Department for Levelling Up, Housing and Communities (DLUHC) spokesperson told reporters, as cited by The Independent, that the government’s approach provides “significant and sustainable support” to all local authorities.
The spokesperson added:
“This year’s local government finance settlement ensures stability and predictability, allowing councils to plan ahead and protect essential services. We recognise that pressures vary across regions, and supplementary funding programmes are available where exceptional needs are demonstrated.”
How do funding pressures affect local services?
Financial strain among councils has tangible effects on public services. Local authorities often face unenviable choices between raising council tax, borrowing money, or cutting essential services. In Havering, several community hubs and youth facilities have faced uncertain futures as a consequence.
Recent budget papers reviewed by The Yellow Advertiser indicate that some of the £83 million increase will go toward essential statutory obligations rather than new projects. This aligns with a broader national trend where councils prioritise social care and housing above discretionary spending.
What happens next?
All councils are now preparing formal budget proposals scheduled for approval in February 2026. These will set out how each borough intends to allocate its incoming government funding in conjunction with locally raised revenue.
In Havering’s case, as Morgon told the local press, the goal is to ensure essential services remain solvent without burdening local taxpayers disproportionately.
However, resolving deeper structural funding disparities may depend on a comprehensive review of the 2010 allocation formula—a long-standing demand across multiple local authorities.
The £73 billion local government funding settlement represents both a relief and a renewed point of contention for councils across London. While ministers present the package as part of a broader plan to empower local government, many leaders view it as insufficient against rising costs and outdated assessment criteria.
Whether this year’s settlement marks a turning point or a temporary reprieve will depend largely on how much flexibility councils retain in using these funds—and whether future reforms finally address the inequalities embedded in the current system.
