Newham LBC has requested exceptional financial support from the government due to £100m in temporary accommodation housing pressures over three years, cabinet papers reveal.
The London borough said it will be unable to balance its 2025-26 budget unless the Ministry of Housing, Communities & Local Government approves an exceptional financial support arrangement.
In August, Newham warned that temporary accommodation spending could account for one-third of its budget by 2027-28.
Budget papers for next week’s cabinet meeting outline a challenging situation, projecting a £175m budget gap over three years.
The anticipated overspend for 2024-25 is £47m, with £31m attributed to temporary accommodation costs, against a revenue budget of £395m for the year.
The cabinet papers reveal the council is in “discussions” with MHCLG “concerning the Exceptional Financial Support (EFS) requested in light of the temporary accommodation challenge facing Newham”.
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Newham does not know the outcome of its support application, and its papers do not reveal how much it has requested. In previous years, the government confirmed arrangements under the exceptional financial support framework alongside the final local government finance settlement.
The mayor and cabinet will discuss recommendations to find £20.3m in immediate savings at next week’s meeting, including a 20% increase in fees and charges.
The report also seeks approval to begin a consultation on leaving its Dockside office and transferring those staff to other buildings, as well as selling off additional property assets.
Other savings measures on the table include closing some of its children’s centers and reviewing the level of council tax reduction support.
Public engagement events are set to start this week, and Newham intends to publish a draft budget in early 2025.
Directly elected mayor Rokhsana Fiaz (Lab) said:
“Most London boroughs have now published information which shows they face exactly the same issues as we do. But we still have to take steps to do all we can to mitigate the situation now – and this is the start of the process.”
In conclusion, Newham LBC faces a significant financial challenge, with a projected £175 million budget gap over the next three years, largely due to rising costs for temporary accommodation. The borough has reached out to the government for exceptional financial support to help address this crisis. Without this assistance, it risks an unbalanced budget by 2025-26. As the council explores various savings measures, including potential service cuts and increases in fees, Mayor Rokhsana Fiaz emphasises the urgent need for action. The upcoming public engagement events will play a crucial role in shaping Newham’s budget and addressing the community’s needs.
