PublicSector
A council in the eye of the storm
The London Borough of Havering has done everything right, yet it still faces a financial crisis. Chris Smith reports
All is not what it seems in a community that is facing both an immediate crisis and future shocks despite following the rules.
There’s the official London Borough of Havering and the one that exists on the outskirts of the capital.
Despite having been one of the capital’s 33 boroughs since 1965, some locals still bristle that its location is in east London. Postcodes claiming Essex are part of the argument, along with a regal history and masses of greenbelt land.
Finding out who is in the real community is even trickier as, according to council leader Ray Morgon, the official data doesn’t reflect the reality. And neither does the financial settlement which is still based on an outdated census.
The actual population is 266,000 but the data used to calculate core grant is the 2018 figure of 257,000. And the make-up has changed: the younger population has increased while the older population has increased their needs for care.
HAVERING'S ACCOUNTS
Havering 2024 budget
Projected overspend
The weekly cost of care for one child in a Havering secure unit
The weekly cost of care for an older person in Havering
And, like every other local authority, the council has to set and balance its budget. So the assessments being made are based on what officers know. And they know services will have to be cut as demand is well in excess of central government support.
The crux problem is demand from vulnerable children and adults plus housing has exhausted finances, including reserves. But in an interview with AT, Morgon makes clear that worse is to come as there are long-term issues that aren’t even on the Whitehall radar.
Shifting needs and demographics
Out of a total population of 266,000:
• 208,600 born in UK
• 5,400 born in Romania
• 4,600 born in India.
According to the ONS, the borough is getting younger. It says: “Between the last two censuses, the average (median) age of Havering decreased by one year, from 40 to 39 years of age. This area had a higher average (median) age than London as a whole in 2021 (35 years) but a slightly lower average (median) age than England (40 years).”
The analysis of the population also reveals that the white and working class community has changed.
The ONS says: “Havering saw London’s second-largest rise in the proportion of people who did not identify with any national identity associated with the UK (from 5.7% in 2011 to 10.3% in 2021). Across the region, only the City of London saw a greater rise.”
Or as Morgon explains: “Our population is bigger now than the 2011 census and the diversity has changed. Our 0-14 cohort is the second-fastest growing in the capital.”
The official data doesn’t reflect the reality. And neither does the financial settlement which is still based on an outdated census
Ray Morgon, Council Leader
“That means we have to plan for schools and the other services they need. The Department for Education uses up-to-date data. The result is 57% of the capital’s education funding now goes to Havering. The same logic isn’t being applied by the Department of Levelling Up, Housing and Communities.”
Despite this, it’s the demands for specialist care for both young and old that is generating the greatest pressure.
Morgon explains: “The cost of care for older people was £800 a week. Due to inflation, wages and energy bills, it’s now £2,000 a week.”
He adds: “We have a child in a secure unit who apparently needs three staff. The bill is £30,000 a week. The sums are eye-watering. In effect, one child has wiped out our entire support grant.”
Increasing pressure on housing
The other factor is the lack of housing for asylum seekers and social housing.
Core supply is limited and, according to the ONS the borough has the second-lowest private stock in London at 15.8%. All this means the borough is facing the prospect of issuing a s114 notice.
The budget is £180m this year but the council is facing a £31.2m overspend.
Has it been profligate or failed to make the savings needed? Or lost visibility of its finances? Morgon reveals the borough is just one of five in the country to have no outstanding audits.
“According to LG Futures, we are the lowest-cost council in outer London,” he says.
Bringing services in-house
The option of shared service deals, the claimed panacea for local government at the start of austerity, isn’t an option for Havering as far as Morgon is concerned. In fact, the trend of services being brought back in-house includes Havering, which is decoupling its IT agreement with London Borough of Newham.
“It’s quite a complex piece of work,” says Morgon. “Transactional, high-volume work is quite easy to deal with. IT is not.”
Selling off council buildings is equally challenging as demand for office space has dropped and the only likely candidate is a 1960s tower block that has huge costs.
There’s also a quality issue with outsourcing: teams not picking up on bigger issues because they are fragmented. For that reason, Morgon says he’d like the call centre back in-house.
Havering is not an unusual case
Is Morgon worried about the council’s future? He’s unfazed mainly because there are other councils with deeper problems.
“We know we are a council with relatively small issues compared to others around the country. There are others with far more fundamental problems than we have.”
