As a local authority, Newham Council is responsible for a range of public services ranging from providing social housing, accommodating the homeless, protecting vulnerable adults and children, maintaining roads and collecting your bins.
However, demand is rising and the costs of providing service are exceeding our annual income. Like every local authority, Newham is increasingly looking at how it can meet increasing demand with less money, while continuing to look after its most vulnerable residents.
We have four main sources of income:
- From Central Government – the General Revenue Grant £45m
- From Newham residents – Council Tax income including the Adult Social Care Precept £110m
- From Central Government – National Non-Domestic Rates (Business Rates) - £171m
- From Central Government - Specific Revenue Grants £68m.
Total - £394m (of which over 70% is reliant on Central Government)
Graphic of where money comes from 2024/5
Graphic for where it is spent 2024/5
Balancing the budget
By law the council must set a balanced budget each year. To do this we estimate we need to make savings of £100m next year alone and £175m in total over the next three years.
The only way we have to achieve this is by reducing, changing or even stopping some services, and/or by increasing fees and charges, and increasing Council Tax.
That’s why it is critical that we understand the potential impact of any proposals to balance the budget Understanding the potential impact on people is therefore critical.
Councillors will consider these options alongside the results of consultation we will carry out during the Autumn, ahead of making decisions to set the Budget early next year.
Key issues for our council
Cost of homelessness in Newham is largely responsible for our forecast budget overspend.
Newham’s budget ended £22.2m in the red last year– caused by spiralling costs of homelessness, and despite allocating additional money this year, demand is already forecast to outstrip resources.
The August finance report to Cabinet (PDF) showed that the council would have remained within its budget in 2023/4 without additional costs of providing temporary accommodation (TA) – a statutory responsibility over which the council has no control. And despite allocating a further £18.5m to the temporary accommodation budget for the current 204/25 financial year, predictions are that costs in this area alone could top £40m.
The Summer 2024 Finance Review report warns that without significant national government policy changes, being asked for by councils across the country, Newham’s spending on TA could account for one third of its total budget.
And taken together with social care costs which already account for a further two thirds of the council’s budget, this would leave very little resource for any other service.
