Newham’s Mayor and Cabinet agree steps to bridge £175 million forecast budget gap 

• Revenue gap of £175m forecast over three years, with £100m because of temporary accommodation housing costs caused by broken housing system
• Members to protect vital services as purpose to build a fairer Newham remains intact
• Engagement events for residents and stakeholders continue until mid-November

Newham’s Mayor and Cabinet have approved a package of savings and income raising measures of just over £20m annually that will be implemented immediately, giving an overall impact over the next three years of more than £51m.

They have also identified a further package of measures worth £20.9m that will be consulted upon and considered as they prepare their draft 2025/26 Budget in the coming months and seek to address the projected budget gap over the next three years.

The £72 million of savings already identified is equivalent to the cost of pressures other than those caused by rising temporary accommodation costs, and the council is already in discussions with the government for exceptional financial support because of that.

In the paper discussed by Cabinet this week further savings options are outlined that are not being taken forward at this time to protect key areas or because further development of saving proposals are needed. These include road repairs, refuse collection and street cleaning. The most radical options of wholly cutting budgets for  Newham’s Children’s Centres, Youth Service commissioning, the Council’s events, heritage and cultural programmes, People Powered Places and library services have also been rejected, but options for both efficiencies and savings are being explored in all of these.

The Council has been transparent about its funding gap arising from increased demand and the spiralling costs of meeting unprecedented demand and cost pressures in its statutory obligations including temporary accommodation Adult Social Care and Children services.

Against a backdrop of government austerity measures, reductions in grants, the absence of fair funding reform for local councils and economic instability leading to higher costs, the Cabinet report highlights the forecast overspend for the current financial year being in the region of £47m, of which £31m is for TA and £16m for additional social care provision.  The report to Cabinet confirmed that both this year and last year’s budgets would have balanced without the additional costs of providing temporary accommodation.

The report highlights that without the administration taking action at the Council now, it could face an unprecedented budget gap of £100m in the 2025/26 financial year rising to £175m by the end of 2027/28, of which £100m would be directly attributable to temporary housing costs.

Newham Mayor Rokhsana Fiaz OBE said “Our budget gap isn’t caused by us taking ill-informed financial risks or poor financial management. We are dealing with a broken housing system and the consequence of fourteen years of cuts, policy failures and a housing crisis mess by the previous government which just dumped on local government time and time again.  While we’re not alone in asking for exceptional financial support, as a Council we are liaising with governing because we are alone in dealing with the exceptional scale of temporary accommodation financial costs because the housing market is failing us.

“I make no apology that we are fulfilling our legal duty to make sure that our people in our borough who have been evicted from their homes are not on the streets. But the costs of temporary accommodation are extortionate.  We are facing agonising choices of course, but we won’t shy away from the tough decisions we need to take. We also won’t ever compromise on the outcomes we want to see for our residents as we continue with our purpose of improving our borough and enabling our people to thrive.”

“We are already taking management actions to manage our in year spend, which are taking effect, and we must and will continue to progress with everything we are already doing in terms of transforming our services, maximising our income recovery and working as efficiently as possible while still making representations to Government,” confirmed Councillor Zulfiqar Ali, Cabinet Member for Finance & Resources.

Among immediate savings and income raising measures agreed by Cabinet, some of which will begin from January 1 2025 are:

• An increase of 20% on all fees and charges, where the council has discretion to charge, other than parking charges. This includes charges for registering births, deaths or marriages, building and facilities hire and penalty charges for things like littering or graffiti and building control fees.
• A series of ‘Invest to save’ proposals for Adult and Children’s Social care to reduce high care costs, including proposals to create specialist foster carers who will benefit from enhanced training and allowances so that they can look after children currently needing expensive residential care; and establishment a multi-disciplinary team working with children who are at most risk of exploitation, serious youth violence or with high level mental health needs as part of the Council’s early intervention and preventative approach. 
• A package of measures to support the acceleration of the Council’s transformation plans so that the Council offers a better experience to residents through its website, automating processes and improving technology.
• Reducing the budget allocated for celebration lights across the borough.

Consultation will also begin on the following service areas, with the outcomes reported back for further consideration by the Mayor and Cabinet as they finalise their draft Budget plans for 2025/26 due to be published early in the New Year:

• Changing the level Council Tax Reduction Support - from 90%, down to 70%, more in line with neighbouring boroughs;
• Reviewing the Council’s library service provision so that any changes can commence from March 2025;
• Consolidating its Children’s Centres; 
• Making changes in how the Council delivers it’s Our Newham services around financial support and employment to identify further savings and how the People Powered Places programme is delivered to reduce costs;
• Moving from the Council’s Dockside Office by locating staff elsewhere and selling or leasing the building to generate income;
• Selling the Council’s out-of-borough portfolio of property assets outside Newham which were brought as investments years ago;
• Considering a range of Just Transition Climate Action environmental measures the Council could pursue relating to commercial and business parking charges and permits.

Public engagement events on the proposals started in early October and are continuing with a series of detailed in-person and online engagement events through to November 2024.

• Watch the Mayor and Cabinet discuss the Budget saving plans and income generating proposals at the Cabinet meeting on Tuesday 15th October 2024 here
• Read about Newham’s Budget plans here 
• Find out how to take part in online or face to face consultation events across the borough throughout October and early November 2024 here: www.newham.gov.uk/wevegotthis