Havering Council has revealed that it is looking at “spending controls” and cost reduction measures to stave off the possibility of it declaring that it faces 'bankruptcy' next year.

Kathy Freeman, strategic director of resources, said during a budget briefing that the council’s reserves may not be enough to cover the costs and overspends in the coming months.

If these are depleted, she added, the council may have to issue a section 114 notice.

According to the Local Government Information Unit, a section 114 notice is "generally seen as demonstrating that a council faces bankruptcy unless it quickly gets its finances in order".

A council report said Havering has approximately £48m of general balances and earmarked reserves left.

The report added that, with a projected overspend in 2023/24 of £23m, this figure is "likely to reduce further" at year end.

The council has also forecast a net budget gap of £31.2m for the financial year 2024/25.

In January, the council had described its current financial situation as “acute”, impacted by factors including the war in Ukraine, demographic pressures and limited central government funding. 

It proposed a council tax hike by 4.99 percent and included plans to close a children’s centre in its draft budget measures at the time.

The council is now looking at decreasing some more of its “non-essential” spends.

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Ms Freeman said: “We will be putting in spending controls. We will be setting up recruitment panels to review all the recruitment requests that have come through. We will have to hold vacancies. We will look at a series of measures."

She claimed the council is also consulting with other local authorities in London to learn about the steps they have introduced.

The council is expected to share the details of these measures in the coming months with budget consultations to be held before making final decisions.

Andrew Blake Herbert, the council's chief executive, claimed that “the spending controls will hopefully bring down this year’s overspend” and its impact into next year, “all of which will help.”

He said: “We are obviously looking into all the other options which will come via cabinets in future meetings.”

Government-appointed commissioners could take over decision-making powers from the council if it declared the section 114 notice.

Ms Freeman added: “They (the commissioners) will come and make some very, very difficult decisions and those decisions will be imposed on us.”

Council leader Ray Morgan said that the council will “do everything it can” to avoid that from happening.