Is Newham Heading for Bankruptcy?
This is an emotive headline, but what more can you expect from a “right-wing hate site”?
Leaving aside the jibes of political pygmies, the scale of the financial crisis facing Newham is becoming increasingly apparent, to anyone save our elected councillors apparently.
You have to be a bit of a political nerd to trawl through the financial forecasts, but if you would care to look at the Summer Financial Review Q1, you will note that:
That’s correct. By March 30th 2025, Newham Council will be overspent by £46m. This is a dreadful state of affairs. Of itself, it is not disastrous. Newham has assets that must be worth close to £1bn; but it can’t all be sold and mortgaging any of it is simply shifting the financial problem to a future administration. Sorting the problem will require saving money and money is generally saved by spending less and reducing staff. You know, CUTS.
That is not what you would expect to see in the light of Cabinet Member, Zulfiqar Ali’s comments accompanying the review.
It is a bit like living in a parallel universe, in which wishing it is so, is translated into reality. There is some reference to difficulties, but of course, these are all the fault of the Tories, (we think that he probably intended to say ‘across the country’).
Having refused to tackle the structural spending problems, (and continuing to spend lavishly on her pet projects), the chickens are coming home to roost. The smaller cuts they had avoided have generated large-scale overspends. A little pain early on was avoided, either for popularity or because of incompetence, but large scale cuts are looming.
But it gets worse.
We already know that there was a projected overspend of £16.93m for 2024/25. The plan was to meet this by selling £17m worth of assets. Now we see that there will be a further £43m overspend.
We see from the figures below that a further overspend of £41.3m is anticipated in 2025/26, (combined total 63,291,000-see yellow line).
And £22m in 2026/27.
This combines to a shortfall of £79,259,000 that has to be made up, (see bottom blue line).
This is the sort of territory where we would expect to see all executive authority stripped from the mayor and council, a section 114 Notice issued and commissioners sent in to sort out the council finances.
Under such circumstances, you might expect the elected incumbents to be a little concerned for their re-election, as well they should be. Labour is facing three years of cuts and asset sales.
Our prediction is that Labour will ditch Fiaz as an electoral liability. So, she won’t have to clean up the mess she has created. That will be someone else’s job. Quite who will want to take it on is anyone’s guess.