The Cabinet of Tower Hamlets Council met on Wednesday, 7 January 2026, to discuss and approve the draft Budget Report for 2026-27 and the Medium-Term Financial Strategy (MTFS) for 2026-29. The meeting also addressed the council's capital programme for 2025-29 and future years, along with proposed fees and charges for various services. A significant portion of the meeting was dedicated to acknowledging the sad passing of Simon Baxter, Corporate Director for Communities.

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

The Cabinet discussed and proposed a draft General Fund Revenue Funding Requirement of £482.151 million for 2026-27. This strategy aims to maintain investment in frontline services while continuing with major transformation programmes. Key financial planning assumptions include a 2% Adult Social Care precept increase and a 2.99% increase on the general Council Tax element for each year of the MTFS. The Council Tax Reduction Scheme will remain unchanged, offering up to 100% support.

Significant investments are planned for key services:

• Adult Social Care: An additional £22.5 million investment is earmarked to address rising demand and pressures.
• Temporary Accommodation: £15 million is allocated to meet statutory duties and accelerate routes into safe and affordable homes.
• Housing: London's most ambitious house-building programme continues, with over 6,000 homes in the pipeline by May 2026, supplemented by the Mayor's Accelerated Housing Programme delivering nearly 3,500 additional homes on council-owned sites. An additional £100 million commitment over the next five years will strengthen investment in existing housing stock, bringing the total planned investment to £318 million. A £400,000 hardship fund will also be established for council tenants facing rent increases.
• Community Safety: Approximately £8 million has been invested, including increasing the number of Trading Standards Officers (TOs) to 72, a dedicated draft squad, and millions invested in upgrading and installing new CCTV cameras. A state-of-the-art CCTV control room has also been delivered.
• Youth Services: An investment of £13.7 million per year is planned to keep open at least one youth centre in every ward.

The MTFS also outlines a robust approach to financial management, including the establishment of two strategic fiscal boards: the Financial Sustainability Forum and the Spending Review Panel. Expenditure control panels have been implemented to scrutinize all spending, distinguishing between essential and non-essential costs. Strong controls around staffing resources have also been put in place.

The budget includes transformation savings of £10 million next year, new savings of £6.4 million, and strategic funding substitution totalling £25 million. Resilience is being boosted by allocating £20 million to a risk reserve, increasing contingency from £5 million to £10 million, and setting aside £5 million annually for transformation.

The Council Taxbase calculations are detailed in Appendix 4, and the Local Council Tax Reduction Scheme will remain unchanged, offering up to 100% support. Discretionary and statutory fees and charges have been reviewed and are detailed in Appendix 5.

The Cabinet recommended the approval of the HRA housing rent and service charge increases, including a 4.8% increase in housing rents for properties and a 3.8% increase in service charges. A £400,000 HRA hardship fund will be introduced to assist tenants negatively impacted by rent increases.

The General Fund (GF) Capital Programme for 2025/26 to 2028/29 proposes a total budget of £207.482 million, while the Housing Revenue Account (HRA) capital programme proposes a total budget of £996.383 million. These programmes are aligned with the Council's strategic plan and aim to deliver new homes, improve existing stock, and enhance community facilities.

Announcements

Mayor Lutfur Rahman and Councillor Steve Reddy, Cabinet Member for Resources and the Cost of Living, expressed deep sadness at the passing of Simon Baxter, Corporate Director for Communities. Simon Baxter was described as an incredible person, an outstanding colleague, and a great friend, leaving a strong legacy of improving the social and physical fabric of London. Books of condolence have been opened at the Town Hall and the Blackwall Depot in his memory.

The Council has activated its severe weather emergency protocol due to temperatures reaching minus five degrees Celsius, providing accommodation for rough sleepers. Council staff have also been gritting roads. Additionally, two New Year's Honours were announced for individuals living and working in Tower Hamlets: an MBE for the headteacher at Ismany Primary School and an MBE for a teaching assistant at Cyril Jackson Primary School.

Overview and Scrutiny Committee

The Chair of the Overview and Scrutiny Committee will address the Mayor and Cabinet once the committee has considered the budget and MTFS report at its meeting on 12 January 2026.

Declarations of Interest

No declarations of interest were made by Cabinet members.

Apologies for Absence

No apologies for absence were received.

Public Question and Answer Session

There were no public questions submitted for this meeting.

The Cabinet agreed to approve the proposed budget and MTFS, subject to Steve's comment on the recommendation.