The Cabinet meeting of Havering Council on Wednesday 18 February 2026 focused heavily on the Council's precarious financial situation, with a proposed 4.99% increase in Council Tax and a significant budget gap for the upcoming years. Key decisions included the approval of the 2026/27 Council Budget Report and the 2026-2030 Medium Term Financial Strategy, alongside the Treasury Management Strategy Statement and the Five Year Capital Programme.

Budget and Medium Term Financial Strategy

The Council's budget report for 2026/27 and the three-year Medium-Term Financial Strategy (MTFS) from 2026 to 2029 were presented, outlining a proposed 4.99% increase in Council Tax. A significant budget gap of £65.9 million for 2026/27 was reported, rising to £77 million on a worst-case scenario. The Council stated it has no alternative but to request further exceptional financial support from the government to balance the budget. Despite delivering over £40 million in savings since 2022, identifying new savings is becoming increasingly difficult. The budget includes an estimated £39 million in increased grant funding from the government's fair funding review, but this is considered far short of the Council's needs.

Cabinet agreed to recommend to Council for consideration and approval the proposed 2.99% increase in core Council Tax for 2026/27 and an additional 2% increase for the Adult Social Care Precept, in line with the government's referendum limit. The proposed Council Tax requirement for 2026/27 was set at £174.421 million. Cabinet also noted that the MTFS still shows a financial gap of £82.3 million in 2028/29, even after accounting for the fair funding review and Council Tax increases.

Treasury Management Strategy Statement and Annual Investment Strategy

Cabinet agreed to recommend to Council for consideration and approval the 2026/27 Treasury Management Strategy Statement and Annual Investment Strategy. This includes revised prudential and treasury indicators, and operational and authorised borrowing limits which are noted to rise to £1,568.2 million and £1,638.2 million respectively in 2028/29. This increase is attributed to the increased borrowing required to finance planned capital expenditure and Exceptional Financial Support (EFS). Cabinet also noted the non-compliance with the Prudential Code regarding affordability and sustainability, directly resulting from the EFS requirements and compounding interest and repayment costs.

Five Year Capital Programme and Strategy Report

Cabinet agreed to recommend to Council for consideration and approval the 2026/27 Capital programme of £391 million, and a total of £1,050 million over the full five-year period from 2026/27 to 2030/31. This includes new capital projects being added to the programme for 2026/27. Cabinet approved the capital strategy, acknowledging its impact on both the capital programme and the financial implications for setting the revenue budget. They also approved the Minimum Revenue Provision Policy Statement, which determines the annual amount set aside for debt repayment.

Other Matters Discussed

Several recommendations from the Overview and Scrutiny Board on the Council's Budget for 2026/27 were discussed. Cabinet responded to these, noting that actions were completed, in progress, or that further written information would be provided. These included exploring the alignment of the Improvement and Transformation Plan with the budget, undertaking further modelling on street trading licence fees, and reviewing wording in the Discretionary Fees and Charges section. Discussions also covered the cost implications of extending free parking, the shortfall from National Insurance increases, piloting bulky waste collection, considering licensed fly-tipping companies, and enhancing communications around Green Flag status for parks.

Cabinet also approved the Housing Revenue Account (HRA) Budget for 2026/27 and the HRA Major Works and Capital Programme for 2026/27 to 2030/31. This included agreeing to increase rents for general needs, supported housing, and temporary accommodation properties by 4.8% from April 2026.

Discussions also touched upon the significant debt the Council is accumulating, with figures indicating a cumulative debt of nearly £370 million by 2028/29, largely due to Exceptional Financial Support. The Council continues to lobby the government for increased funding and for the removal of interest on loans.

Finally, Cabinet noted the Treasury Management Strategy Statement and the Five Year Capital Programme, agreeing that both reports were acceptable.