The Cabinet of Tower Hamlets Council met on Wednesday, 7 January 2026, to discuss and approve the provisional budget report for 2026-27 and the Medium-Term Financial Strategy (MTFS) for 2026-29. The meeting also included a statement on the passing of Simon Baxter, Corporate Director for Communities, and the activation of the Council's severe weather emergency protocol.

Budget Report 2026-27 and Medium-Term Financial Strategy 2026-29 - Provisional

The Cabinet discussed and approved the provisional budget report for 2026-27 and the Medium-Term Financial Strategy (MTFS) for 2026-29. This strategy outlines the Council's financial plan for the next three years, aiming for a balanced and sustainable budget despite significant national pressures on local government.

Key aspects of the budget and MTFS include:

• Increased Investment in Frontline Services: The budget maintains investment in frontline services while continuing with major transformation programmes. This includes an additional £22.5 million investment into adult social care and £15 million for temporary accommodation.
• Ambitious Housing Programme: The Council continues to deliver London's most ambitious 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 over the next five years to strengthen investment in existing housing stock, bringing the total planned investment to £318 million.
• Fiscal Prudence and Reserve Management: The strategy emphasizes fiscal prudence, maintaining reserves above recommended minimum amounts. The risk reserve is increased by £20 million per annum, contingency is increased by £15 million over the MTFS period, and the General Fund reserve is maintained at a minimum of £25 million throughout the MTFS. There is no planned drawdown of reserves to fund ongoing expenditure. A Transformation Reserve of £5 million annually is created to support major transformations.
• Council Tax: The Council proposes to levy a 2% Adult Social Care precept and a 2.99% increase on the general Council Tax element for 2026-27. Protections remain in place for the most vulnerable through the Council Tax Support Relief Fund, offering up to 100% support, and the cost of living council tax relief fund is maintained for households earning less than £50,350.
• Housing Revenue Account (HRA): Housing rents are proposed to increase by 4.8% for 2026-27 (CPI +1%), and service charges by 3.8% (CPI). A £400,000 hardship fund is to be established for tenants facing rent increases but not eligible for other benefits. The HRA capital programme is set at £996.383 million, supporting investment in existing homes, new property acquisition, new development, and community resources.
• Fees and Charges: Discretionary and statutory fees and charges are reviewed annually, with general increases aligned to RPI (4.5%) to match inflation.
• Capital Programme: The General Fund capital programme proposes a total budget of £207.482 million, and the HRA capital programme proposes a total budget of £996.383 million. This includes new investments, reductions, and the continuation of existing schemes, all aligned with the Council's strategic plan. Notable highlights include park improvements, SEND provision at Hermitage School, youth service refurbishments, a new culturally sensitive recovery centre, and significant investment in highways and street lighting.
• Budget Consultation: The report noted that the budget consultation, which ran from 27 October to 8 December 2025, indicated that public health and housing services were the strongest priorities for residents and businesses.

Statement on the Passing of Simon Baxter

Mayor Lutfur Rahman and Steve Reddy, Corporate Director for Resources, made statements expressing deep sadness at the passing of Simon Baxter, Corporate Director for Communities, on Sunday, 4 January 2026. Simon Baxter was remembered as an incredible person, an outstanding colleague, and a great friend, who dedicated 41 years to public service across London. His legacy includes significant improvements to the social and physical fabric of Tower Hamlets, and he was instrumental in leading the newly formed Communities Directorate. Books of condolence have been opened at the Town Hall and the Blackwall Depot in his memory. A minute's silence was observed.

Severe Weather Emergency Protocol

Cabinet noted that the Council had activated its severe weather emergency protocol due to temperatures reaching minus five degrees Celsius, to provide accommodation for rough sleepers. Council staff were also actively gritting roads.

New Year's Honours

It was noted that two New Year's Honours had been awarded to individuals living and working in Tower Hamlets: the headteacher at Ismany Primary School received an MBE, and a teaching assistant at Cyril Jackson Primary School also received an MBE.

Overview and Scrutiny Committee

The Chair of the Overview and Scrutiny Committee was not in attendance but would address the Mayor and Cabinet once the committee had considered the budget and MTFS report at its meeting on 12 January 2026.

The Cabinet agreed to approve the proposed budget and MTFS, subject to any remaining changes arising from the final Local Government Finance Settlement and other necessary adjustments before the February Full Council meeting.