The Overview & Scrutiny Committee of Tower Hamlets Council met on Monday 12 January 2026 to scrutinise the council's provisional budget for 2026-27 and its Medium-Term Financial Strategy (MTFS) for 2026-29. Key decisions included the approval of a net General Fund budget requirement of £482.151 million for 2026-27, with a proposed 2% Adult Social Care precept and a 2.99% increase on the general Council Tax element. The committee also reviewed and discussed significant investments in adult social care (£22.5 million) and temporary accommodation (£15 million), alongside a substantial £100 million additional investment in existing council housing stock.

The meeting focused heavily on the council's financial strategy for the coming years, with extensive discussion on budget proposals, savings, and the management of reserves. Councillor Abdul Wahid chaired the meeting, which also acknowledged the sad passing of Simon Baxter, a corporate director. Key areas of scrutiny included the proposed rent increases for council tenants (4.8%), the establishment of a £400,000 hardship fund for those affected, and the council's approach to fees and charges. Significant time was dedicated to understanding the financial risks associated with demand-led services such as adult social care, children's services, and temporary accommodation, and the council's strategies for mitigating these pressures through efficiency savings and transformation programmes.

Budget and Medium-Term Financial Strategy (MTFS)

The committee extensively reviewed the council's provisional budget for 2026-27 and its Medium-Term Financial Strategy (MTFS) for 2026-29. Councillor Saied Ahmed, Cabinet Member for Resources and the Cost of Living, and Abdul Razak Karim, Corporate Director for Resources, presented the strategy, highlighting the council's approach to managing significant financial pressures.

A key decision was the proposal for a net General Fund revenue funding requirement of £482.151 million for 2026-27. This budget includes an additional £15 million for temporary accommodation and £22.5 million for adult social care growth. To balance the budget, the council plans to implement new savings and efficiencies totalling £6.4 million in 2026-27, supported by £25 million in strategic funding substitutions and £10 million from transformation-driven reductions.

The council also proposed a 2% Adult Social Care precept and a 2.99% increase on the general Council Tax element for 2026-27. Protections for the most vulnerable residents remain in place, with the Council Tax Support Relief Fund continuing unchanged, offering 100% support for those on the lowest incomes. A new £400,000 hardship fund will be established for council tenants facing rent increases but not eligible for other benefits.

The MTFS also outlines a significant investment in housing stock, with an additional £100 million committed over the next five years, bringing the total planned investment to £318 million. This includes £140 million to address damp and mould, decent home standards, fire and building safety works.

The council is boosting its financial resilience by allocating £20 million to a risk reserve, increasing contingency from £5 million to £10 million, and setting aside £5 million annually for transformation purposes. The general fund reserve is to be maintained at a minimum of £25 million throughout the MTFS period, with no planned drawdown of reserves to fund ongoing expenditure.

Fees and Charges

The committee discussed proposed discretionary and statutory fees and charges for 2026-27, detailed in Appendix 5. The general principle is that fees and charges will be increased by April's RPI (4.5%) to match inflation. Other factors considered include service demand, projected costs, benchmarking against other local authorities, and the impact of the cost of living crisis on residents.

Councillor Nathalie Bienfait raised concerns about the 4.8% rent increase for council properties, acknowledging the difficulty this presents for residents. Councillor Saied Ahmed explained that this increase follows the CPI plus 1% formula, a standard practice across many councils. He highlighted the £400,000 hardship fund established to support vulnerable tenants facing rent increases, particularly those who are working and not fully supported by benefits. Councillor Abdi Mohamed questioned the strategy behind varying fee increases, noting decisions to freeze some fees while increasing others, such as parking. Councillor Ahmed clarified that decisions are made on a case-by-case basis, balancing sustainability with resident support, and that parking fees were carefully considered due to residents' struggles with new emission regulations.

Housing Revenue Account (HRA)

The Housing Revenue Account (HRA) budget for 2026-27 was presented, including a proposed 4.8% increase in housing rents for properties. This increase, based on the September CPI figure plus 1%, is intended to fund reinvestment into the housing stock, including new developments and improvements to existing properties. The council is committed to building 4,000 new homes and is on track to exceed this target, with over 6,000 homes in the pipeline by May 2026.

The HRA is also facing unprecedented cost increases due to factors such as Brexit, the COVID-19 pandemic, and the war in Ukraine, leading to inflation and rising interest rates. The proposed rent increase, alongside other measures, aims to ensure the HRA remains balanced and can sustain investment in the housing stock. The £400,000 hardship fund, financed by additional rental income, will assist tenants negatively impacted by rent increases, with qualifying criteria to be established. An additional £100 million is being invested in existing housing stock over the next five years, bringing the total planned investment to £318 million.

Service charges are also proposed to increase by 3.8% (CPI) to reflect the cost of providing these services.

Community Safety and Enforcement

A significant discussion point was the proposed reduction in police patrols on housing estates, moving from 16 to 10 police officers, with a projected saving of £200,000 per year. Councillor Abdi Mohamed expressed concern, arguing that enforcement officers, while valuable, do not possess the same powers as police officers and that this reduction would decrease security levels. Councillor Saied Ahmed defended the decision, emphasizing value for money and the effectiveness of the council's own enforcement officers (THEOs), who have arrest powers and can issue fixed penalty notices. He argued that THEOs are often more effective at tackling anti-social behaviour that directly impacts residents and that the council is investing in CCTV and empowering THEOs.

Further scrutiny was applied to the proposed restructuring of the environmental services team, which would see a reduction in police numbers and the integration of environmental enforcement into the THEO service. Councillor Abdi Mohamed raised concerns about asking the enforcement team to handle more responsibilities with fewer people, particularly regarding environmental crime. Councillor Saied Ahmed and David Joyce, Corporate Director of Housing and Regeneration, explained that this was part of a wider efficiency review to consolidate enforcement functions and deploy resources more effectively. They highlighted that THEOs have broader remits and that this consolidation aims to improve efficiency and robustness.

Adult Social Care and Children's Services

The committee delved into the pressures facing adult social care and children's services. Councillor Gulam Kibria Choudhury questioned how the £22.5 million growth in adult social care would address long-term structural pressures. Chris Leslie, Corporate Head of Financial Management, clarified that the £22.5 million is broken down into £10 million for structural deficit, £7.5 million for inflationary pressures, and £5 million for demographic growth.

Councillor Ahudu Khan raised concerns about the £30 million overspend in temporary accommodation and how the £15 million homeless growth would lead to measurable reductions in temporary accommodation costs and improve resident outcomes. Councillor Saied Ahmed explained that the investment is not just about funding services but also about transformation and finding efficiencies. David Joyce added that pressures in temporary accommodation are threefold: increased costs, increased demand, and frozen subsidy levels. He highlighted progress in securing private rental properties and transforming IT systems for housing applications.

Councillor Abdul Mannan inquired about managing inflation and demand pressures on children's social care, particularly concerning SEND services. Councillor Saied Ahmed and Steve Reddy, who works in children's services, explained that Tower Hamlets performs well in social care by keeping children in care at lower numbers compared to other councils and investing in foster carers. They also mentioned the national Families First reform agenda and the ongoing national programme of SEND reform.

Other Key Discussions

Council Tax: The council plans to propose a 2% Adult Social Care precept and a 2.99% increase on the general Council Tax element for 2026-27. The Council Tax Reduction Scheme will remain unchanged, offering 100% support to residents with the lowest incomes.

Capital Programme: The General Fund capital programme proposes a total budget of £207.482 million, and the Housing Revenue Account (HRA) capital programme proposes a total budget of £996.383 million. These programmes are underpinned by the Council's strategic plan and aim to deliver new homes, improve existing stock, and address fire and building safety. Notable investments include £100 million for existing housing stock improvements, £15 million for temporary accommodation, and £22.5 million for adult social care growth. The LLDC transfer of £14.8 million in CIL, S106, and NCIL funding will support projects such as highway improvements and community spaces.

Reserves: The council is strengthening its financial resilience by increasing the risk reserve to £25 million over the MTFS period, bringing total General Fund and Risk reserves to £50 million. Contingency provisions are also being increased.

Fees and Charges: The committee reviewed proposed discretionary and statutory fees and charges for 2026-27, with a general principle of increasing them by RPI (4.5%) to match inflation.

Recommendations: The committee discussed potential recommendations to be submitted to the Mayor, including a reconsideration of the reduction in police patrols on housing estates.

The meeting also acknowledged the passing of Simon Baxter, a corporate director, with a minute's silence observed in his memory. Apologies were received from Councillor Sabina Khan, with Councillor Harry Mio substituting.