The Overview & Scrutiny Committee of Tower Hamlets Council met on Monday 12 January 2026 to scrutinise the provisional budget for 2026-27 and the Medium-Term Financial Strategy (MTFS) for 2026-29. Key discussions included significant additional investments in adult social care and temporary accommodation, alongside plans for new housing developments and improvements to existing council housing stock. The committee also reviewed fees and charges, with proposed increases for housing rents and other services.

The committee heard that the council is facing significant financial pressures, particularly in adult social care, housing need, and rising SEND demands. These challenges are exacerbated by the borough's position as an inner London borough with high deprivation and rapid population growth. The council's strategy involves a dual approach of fiscal prudence and preventative investment, aiming to deliver a balanced and sustainable financial plan for the next three years while maintaining reserves above recommended minimum amounts. The budget includes a £22.5 million additional investment into adult social care and £15 million for temporary accommodation. Alongside this, the council is continuing its house-building programme with over 6,000 homes in the pipeline by May 2026, supplemented by nearly 3,500 additional homes through the Mayor's Accelerated Housing Programme. A further £100 million is committed to strengthening investment in existing council housing stock over the next five years, on top of an ongoing £140 million investment to address damp and mould, decent home standards, and fire and building safety works, bringing the total planned investment to £318 million.

The meeting also addressed the proposed fees and charges for 2026-27, which included a 4.8% increase in housing rents (CPI +1%). Councillor Said Ahmed, Cabinet Member for Resources and the Cost of Living, explained that this increase is a standard formula applied across most councils and acknowledged the difficulty this presents for residents. To mitigate this, a new £400,000 hardship fund will be established to support council tenants facing rent increases who are not eligible for other benefits. Other fees and charges were also reviewed, with a general principle of increasing them by RPI (4.5%) to match inflation.

Discussions also covered the council's reserves strategy, with a proposal to increase the risk reserve by £20 million per annum, increase contingency by £15 million over the MTFS period, and maintain the General Fund reserve at a minimum of £25 million. A £5 million annual transformation reserve is also to be created to support major transformations. The Dedicated Schools Grant (DSG) remains in deficit, with the council awaiting further clarity from the government on how this will be treated in future years.

Concerns were raised by councillors regarding the reduction in police patrols on housing estates, from 16 to 10 officers, with a saving of £200,000 per year. Councillor Abdi Mohamed questioned the rationale, arguing that enforcement officers do not have the same powers as police officers. Councillor Said Ahmed defended the decision, stating it was about value for money and reallocating resources to where they are most effective, highlighting the work of the Tower Hamlets Enforcement Officers (THEOs).

The meeting also touched upon the council's commitment to tackling damp and mould, with £140 million set aside for this purpose, and a further £100 million to be invested in existing stock, bringing the cumulative total investment to £318 million. The council is aiming to improve its stock decency levels, with approximately 8,000 out of 11,000 tenanted properties currently meeting decent home standards.

The council's financial strategy aims to create conditions for long-term sustainability and resilience. This includes disciplined financial planning, targeted investment, and transformation. The provisional local government finance settlement for 2026-27 was announced on 17 December 2025, representing a significant redistribution of funding within the sector. The council's core spending power (CSP) is projected to increase in cash terms, but real-terms CSP per capita remains below earlier peaks due to population growth.

The meeting also acknowledged the sad passing of Simon Baxter, a corporate director, with a minute's silence observed in his memory. Apologies were received from Councillor Sabina Khan, with Councillor Harry Mio substituting.