• Draft Budget report highlights projected gap reduced from £175m to £157m by 2027/28, with £32m savings delivered in the coming 2025/26 financial year.
• London-wide housing crisis remains biggest driver on financial pressures facing the Council.
• As part of Newham’s application for Exceptional Financial Support, the Council will consider increasing Council Tax by 10 percent with an assumption of 80 percent Council Tax Relief Scheme for vulnerable households.
• If agreed by Full Council, Newham’s Council Tax forecast to remain 7th lowest in London.
Newham’s Mayor and Cabinet have today (9 Jan) approved a draft 2025/26 Budget plan signalling the start of engagement with residents ahead of finalising budget plans for the 2025/26 financial year which will be presented to Full Council on 27 February. With £32m of savings being proposed, the Budget plan follows a robust budget challenge process chaired by Mayor Rokhsana Fiaz OBE, involving independent experts, Cabinet members and senior officers over the past two months, alongside engagement with local residents.
The draft Budget proposals discussed by Newham's Cabinet once again put the spotlight on the London housing crisis as temporary accommodation and social services costs continue to soar, with the projected Budget forecast gap facing the Council now reduced over the next three-years from £175m to £157m by 2027/28.
The report also highlights ongoing Council discussions with Central Government about its application for Exceptional Financial Support, which could allow Newham Council to use money from the sale of its assets to balance its general fund budget next year; and proposals to raise Council Tax by 10 percent if approved by the Government.
Newham Council predicts it will still set the seventh lowest council tax in London if the proposed rise goes ahead resulting in a weekly increase of £2.41 for a Band D household. The budget papers also assume an 80 percent Council Tax Relief Scheme to support vulnerable households – with consultation on changes continuing until 14 January 2025.
The proposals highlight how savings totalling £32m for the coming financial year have been identified, and how the administration’s commitment to 'Building a Fairer Newham' priorities remain intact.
The Mayor and Cabinet have prioritised local investment in housing and essential services, including those that support early intervention and preventative approaches to reduce long-term costs. The savings also reflect the priorities expressed by local residents through the Council’s draft Budget engagement process underway.
Mayor of Newham, Rokhsana Fiaz OBE said: “We’ve had fourteen years of disastrous Tory mismanagement of the economy leading to the financial crisis all councils now face because of the housing crisis and failures on social care. Newham is on the frontline of this financial SOS, despite investing in our residents and communities on the things that matter to them over the past six years and through the hardest of times.
The new Labour Government acknowledges the work that our Council has done to keep services going through these tough times, and are under no illusion about the double whammy of growing demand for services, particularly in social care and temporary accommodation cost. That is why I am optimistic about the government’s multi-year financial settlement plans, based on fair funding and deprivation, because the levels of inequality that exists in our borough leads to so many households living financially precarious lives.
That is why our draft 2025/26 Budget proposals show how we remain determined to continue our mission of building a fairer Newham, where we support our residents across all ages to thrive. They know they have an administration that wants the best for them and their families and all our residents.
We remain determined to achieve long lasting benefits for our communities and Newham as a place through our building a fairer Newham purpose, and in our draft budget plans we have protected those council services that reflect the priorities expressed by local residents through our engagement with them. We have also focused on early intervention and preventative approaches to ultimately reduce the growing cost pressures of the vast array of statutory requirements we have to deal with.
Our draft budget plan shows our ongoing determination to prioritise fairness in tough times. It allows us to make changes at the Council so that we move away from partial fixes to deal with the root causes that are expensive and cost vast amounts. We will always focus on outcomes that transforms people’s lives, rebuild the foundations of public services and reignite public trust.”
Councillor Zulfiqar Ali, Cabinet Member for Finance and Resources, said: “Newham has a great record of delivering new housing and jobs, but our ability to deliver the Government’s growth agenda and our priority Building a Fairer Newham ambitions will be severely restricted if we can’t fund the very services that make our borough a great place to live.
“Nearly 70 percent of our budget, like most councils, is already spent on services for vulnerable children and adults, leaving just the remaining 30 percent for every other service we provide. That’s why we are needing to apply for Exceptional Financial Support which allows us to sell our Council assets to fund day-to-day spending. This obviously isn’t sustainable and the whole local government sector needs multi-year fairer funding settlements based on local need.
“The proposed Council Tax rise is the amount the Government expects us to consider, and is entirely down to the growing costs to stop people being on the streets because of the housing crisis in London; and we remain committed to supporting those most in need through a proposed 80 percent Council Tax Relief Scheme.
“We have listened to residents through our consultation, who understand the escalating housing and social care pressures facing Newham Council, and we have reflected their views in our draft Budget proposals. We’ll be seeking more of their views through an engagement programme with them and other valued partners such as local businesses and councillors who will be able to scrutinise our plans before we bring a final 2025/26 Budget plan to Full Council in February for approval.”
