The Overview and Scrutiny Committee of Newham Council met on Tuesday 22 July 2025 to review the council's financial position and its response to a Best Value Notice. Key discussions included a significant projected budget gap of £115 million by 2028/29, driven largely by rising temporary accommodation costs, and the council's strategy for addressing this through savings, asset disposals, and potential further exceptional financial support requests. The committee also reviewed the council's response to a Best Value Notice issued by the Ministry of Housing, Communities and Local Government, which highlighted concerns regarding governance, culture, and service delivery, particularly in housing and adult social care.

July Finance Review

The committee reviewed the council's financial position, which remains challenging. The projected budget gap is estimated to reach £115 million by 2028/29. This significant shortfall is largely attributed to the escalating costs of temporary accommodation (TA), which have risen dramatically from £14 million in 2022/23 to £88 million for 2025/26. While the council has implemented savings measures, including the sale of assets and a review of services, further substantial savings of approximately £50 million are needed in 2026/27 to avoid reliance on Exceptional Financial Support (EFS) from central government.

The council's financial outturn for 2024/25 showed an overspend of £40.6 million, slightly less than initially forecast due to successful negotiations on TA accommodation rates. However, the demand for TA continues to rise, with an average of 60 new households entering temporary accommodation each month. The council is exploring various strategies to mitigate these costs, including increasing housing supply and improving resettlement into the private rented sector.

The Medium-Term Financial Strategy (MTFS) highlights the need for difficult policy choices and engagement with residents and stakeholders to prioritise services. The council is undertaking a zero-based budgeting exercise and plans to consult the public on potential service reductions or reprioritisations.

The Housing Revenue Account (HRA) reported an underspend of £12.6 million in 2024/25, with £15 million being used to fund the capital programme to reduce long-term borrowing costs. The Dedicated Schools Budget (DSB) also showed an underspend of £4 million, reducing its deficit. However, the DSB deficit is a growing concern nationally, and the council is awaiting further guidance from the Department for Education on how these deficits will be managed beyond March 2026.

MHCLG - Non-Statutory Best Value Notice

The council received a Best Value Notice from the Ministry of Housing, Communities and Local Government (MHCLG) on 8 May 2025, citing concerns about governance, culture, and service delivery, particularly in housing and adult social care. The council has acknowledged these concerns and is committed to leading its own improvement journey.

The response to the Notice is structured around three key themes: Governance, Culture & Capability; Financial Sustainability; and Improving Services for Residents. Work is underway to develop an Integrated Improvement Plan, with regular quarterly updates to be provided to Cabinet, Council, Overview & Scrutiny, and the Audit & Governance Committee.

The council is continuing to work with its independent Newham Transformation & Improvement Board, chaired by Rob Whiteman, which provides support, challenge, and assurance. The Board has been strengthened with additional technical and political experts.

Progress has been made in several areas, including refreshing corporate governance, developing a new Workforce Strategy, and improving member-officer relationships. The council's housing services are undergoing significant improvement following a C4 rating from the Regulator of Social Housing, with actions being taken on health and safety, stock condition surveys, and compliance audits. Adult social care services have also seen improvements, including a new Practice and Quality Assurance Framework and a focus on person-centred care.

The council has engaged with MHCLG officials to discuss its improvement plans and seek clarification on expectations. The government acknowledges the council's improvement journey and the significant financial challenges it faces, particularly in relation to temporary accommodation.

Work Programme

The committee reviewed and approved the draft Annual Scrutiny Work Programme for the municipal year 2025/2026. Key topics to be scrutinised include the ongoing July Finance Review, the Non-Statutory Best Value Notice, and transformation progress. Future agenda items will also cover grants funding, organisational performance, and the annual complaints report. The committee also noted the forward plan of key decisions and confirmed appointments to various scrutiny commissions and working parties.

Appointments

The committee confirmed the membership of the Overview and Scrutiny Committee, its various Scrutiny Commissions, and joint scrutiny bodies for the 2025/26 municipal year. Councillor Lester Hudson was confirmed as Chair of the Overview and Scrutiny Committee. Councillor Anthony McAlmont was noted as Chair of the Relationship Between Black Boys and the Borough Scrutiny Commission.

The meeting was chaired by Councillor Lester Hudson, Chair of Overview and Scrutiny. The meeting was live-streamed on YouTube. Apologies were received from Councillor Garfield and Councillor Carleene Lee Parkway. Councillor Simon Reid attended on behalf of Jason Strelitz. Paul Lesley offered to continue as a co-opted member. Councillor Anthony McAlmont was named as Chair of the Relationship Between Black Boys and the Borough Scrutiny Commission. The next meeting is scheduled for 16 September 2025.