The Overview and Scrutiny Board is requested to scrutinise the budget papers and agree any comments that it wishes to submit to Cabinet.

Cabinet reports including Budget, Treasury Management Strategy Statement and Capital Programme & Strategy attached.

The Board received an update on the 2026/27 Budget and the Medium Term Financial Strategy (MTFS)

Board members noted the Budget and MTFS was to be presented to Cabinet on 18^th February 2026 with a Section 25 statement on the robustness of estimates and reserves and that the Treasury Management Strategy being presented to Audit on 24^th February 2026. The Board noted the Budget and MTFS would be presented to Full Council on 4^th March 2026.

Officers outlined that the Council would require a Capitalisation Direction/Exceptional Financial Support (CD/EFS) to set a balanced budget with an indicative mid-case figure being £73m and a worst-case figure of £84m . This would be in addition to the requirement for the General Fund after savings, the Fair Funding outcome and the maximum Council Tax increase. Officers explained that the Council’s financial position was not sustainable on current trajectories as they had projected a £90m gap across years 2 and 3 of the MTFS, implying ongoing need for exceptional financial support. Monthly discussions with MHCLG were ongoing. Compound debt could exceed £200m by the end of the MTFS with borrowing costs roughly £28m per annum. Officers described ongoing work to reduce costs, review demographic pressures, particularly in People services and Temporary Accommodation, and pursue invest?to?save capital schemes. Members noted the Treasury Strategy would reflect CIPFA Code requirements, noting that the current level of borrowing associated with exceptional support was not sustainable and that full code compliance was therefore not achievable. A bid to MHCLG had been submitted on 13^th December 2025 and a response was expected ahead of Full Council on 4^th March 2026.

Officers confirmed that the MTFS was not financially sustainable beyond 2026/27 without further support and structural change. A significant high needs deficit within the school needs grant of  roughly £65m by year end was forecast however the statutory override would not allow for any overspend to occur. About £18m of capital receipts were expected which was insufficient to fund the CD/EFS. The 2023/24 overspend of £18m had used capital receipts, while the 2024/25 overspend of £34m had been financed by borrowing. Members discussed separating EFS indicators from the capital programme to reflect that. It was noted that while the capital programme was affordable with risks, EFS?related borrowing was not. Regeneration, affordable housing delivery and viability were discussed, along with the wider national context of many councils seeking EFS and the limitations of the Fair Funding Review in addressing social?care pressures. Officers also updated members on the £10m proposed savings, the Assurance Board’s work, and specific operational proposals. Early?help initiatives and data?sharing constraints with partners, specifically the NHS and Police were noted, as was the decision to not have fixed “trigger points” for a s114 report. Officers outlined the NI funding shortfalls of about £200k and the approach to business?rates changes within budgeting.

Further service?level points were discussed and covered areas such as pre?application planning , bulky?waste collection pilots to which members suggested a single?item, area?based approach subject to sufficient demand, Green Flag status communications with residents and exploration of alternative adult?social?care arrangements while prioritising family settings. Officers confirmed there were no current proposals to join services with other councils, noting the historic OneSource arrangements with Newham. Officers explained there was a continued pursuit of JV regeneration as a route to affordable housing with public realm benefits and members questioned if there was potential for licensed individual collectors to support fly?tipping removal, subject to proper disposal controls.

The Board recommended:

1.    That Officers explore aligning the Improvement and Transformation Plan with the Budget and Medium-Term Financial Strategy (MTFS)

2.    That Officers undertake alternative modelling on the impact of reducing street-trading licence fees

3.    That Officers review the wording within the Discretionary Fees and Charges section to ensure it reflects a compassionate approach to sensitive issues

4.    That the Board be provided with information on the cost implications of extending 30 minutes free parking across all areas of Havering

5.    That Officers confirm to the Board the value of the shortfall created by the National Insurance increase

6.    That Officers explore a pilot scheme delivering a single, coordinated bulky-waste collection within a defined geographical area given sufficient bulky-waste demand exists

7.    That Officers consider the feasibility and potential benefits of introducing individually licensed fly-tipping collectors

8.    That Officers explore opportunities to enhance communications with residents regarding Green Flag status and achievements within local parks.