‘Tough decisions’ ahead after Waltham Forest overspends by £18m

“Tough decisions” will need to be taken after Waltham Forest Council overspent by more than £18million last year, the leader has said.

The annual outturn report for 2023/24, presented to the cabinet on Tuesday July 9, showed a deficit of £18.3m.

As the authority looks to cut its services, council leader Grace Williams told the cabinet: “We know if we don’t continue to take tough decisions now, then in just a year’s time we will be in a very difficult place with reserves and our ability to function.

“We have no alternative but to continue taking tough decisions.”

She said its financial management “needed work” and Waltham Forest would “carefully monitor” spending going forward.

Paul Douglas, cabinet member for finance, told his fellow Labour councillors the authority would be “making changes” after a “difficult year,” but the blame lay with central government.

He said the reasons for the overspend included challenges presented by inflation, but “a lot of it is the fault of the [outgoing Conservative] government”.

He added: “We can’t be in this position in twelve months’ time, though I’m confident we will meet these challenges.”

National funding for councils has significantly reduced since 2010, according to the Institute for Fiscal Studies. In June, it reported that councils’ funding per person had fallen by a real-term average of 26% across the UK.

Hoping to improve the financial picture, Waltham Forest has been exploring a series of service cuts over recent months.

On Monday (July 8), the authority launched its five-week consultation on the potential closure of Markhouse Centre, a day centre for disabled adults.

It plans to make additional savings over the next two years by making cuts to children’s services and various internal departments, such as the communications team.

At the time, chief financial officer Rob Manning said the council faced “unprecedented levels of demand,” particularly on providing adult social care, children’s welfare, special needs support and temporary housing.

After each municipal year, councils must produce an outturn report, comparing the amount they spent against their approved budget. It also breaks down revenue, or how much the authority brought in over the year.

A council can dip into its reserves to balance the following year’s budget, but reserves can be difficult to build back up again amid financial uncertainty.

In regards to capital expenditure, Waltham Forest approved a budget of £144m February 2023, but ended up spending £176m. Its biggest purchase of the year was land next to Leyton Orient’s football stadium in Osier Way, where it plans to build affordable housing, at £56m.

Last month, the cabinet approved a joint venture with housing provider Mears to buy 400 homes in a bid to ease pressures on providing temporary accommodation. They will be used to house residents facing homelessness, to which the council owes a statutory duty.

Prime Minister Keir Starmer has acknowledged many councils across the UK face severe financial challenges, but previously said he wouldn’t “turn the spending taps on”.

Cllr Douglas warned that despite the “early successes” of the new administration, there were “no quick fixes”.

He said: “[The UK economy] will take years to sort out. As much as we are joyous now, it won’t be tomorrow, it won’t be next week, it won’t be next month.

“Improvements are months and years away, but we will do better this year.”

Waltham Forest is not alone in its financial woes.

Redbridge Council overspent by £15m last year. Jas Athwal, the leader and newly-elected Ilford South MP, said improving council funding would be among his top priorities as her headed to parliament.

Meanwhile, the chief executive of cash-strapped Havering Council said it was in an “improved position” despite an overspend of £18m. It received a £54m government bailout in March to plug its budget gap of £32.5m.


Sebastian Mann

Local democracy reporter