Parking price hikes, library closures and ending Romford's Sunday Market are earmarked by Havering Council as it seeks to plug a huge gap in its finances.

In an update published yesterday (November 2), the council revealed £12million in “savings” it is planning from April 2024 in a bid to balance a £31m budget shortfall.

Changes to parking will include pay and display increases of 40 per cent, charges at all parks, charges on Sundays for the first time, expanded residential parking zones, and 12 to 16pc increases on existing parking permit prices.

Other cuts are likely to include closing one or more libraries, seeking “alternative” funding for five Metropolitan Police officers paid by the council, and closing Romford Market on Sundays.

MORE NEWS: Gallows Corner flyover replacement plan ‘not likely’ to impact environment

The council’s budget update report, due to be formally approved by cabinet next week, says it is “very aware” of the impact cuts could have and pledges to do “everything it can” to maintain high-quality services.

It argues that the council has “acted robustly” to manage the financial crisis, which it blames on “years of underfunding from central government”.

Last month, the council’s newly-appointed finance chief Kathy Freeman warned that the council could be forced to issue a section 114 notice within “six to 12” months.

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".

The council argues it is “well-run”, with low running costs compared to neighbours, but faces the large and growing expense of residents’ social care needs.

It says the government’s formula for funding councils is “ten years out of date and not fit for purpose”.

When approached for comment, a spokesperson for the Department for Levelling Up, Housing and Communities said Havering’s spending power increased by 9.2pc last year.

The spokesperson did not respond when asked about the government’s failure to update its funding formula but said the department is ready to “speak to” any council that is concerned about its finances.

In total, the council’s income is projected to be about £218m this year, about two-thirds of which comes from council tax and the remainder from government grants.

Havering argues this is not enough due to “sharply” increasing costs of caring for vulnerable older and younger residents.

MORE NEWS: Indoor activity venue set to replace trampoline park after refurb

The council is also helping growing numbers of residents who are at risk of homelessness, but due to the lack of privately rented housing many are being placed in more expensive bed and breakfast accommodation.

The £31m financial shortfall next year is set to only partly be balanced by £12m in cuts and £7m raised through a five percent increase in council tax.

There is still a “significant gap” of £12m, but at this stage Havering’s cabinet has rejected about £4.5m in cuts such as halving its contact centre staff team, closing most libraries and stopping 30 minutes free parking.

The council’s reserves – now at about £48m – are “very low” and have been diminishing year on year.

About £10m in cuts have also already been planned this financial year, alongside £6m in planned cuts from previous years that have been “carried forward” because the savings have not been realised.

If the council is unable to balance its budget, Ms Freeman is legally required to issue a Section 114 notice.

This could result in government commissioners taking over and cutting most non-essential spending, selling the council’s assets or raising council tax by more than five pc.

In a bid to avoid this, the council will also ask the government for permission to issue a “capitalisation directive”, which would involve taking an expensive long-term loan from the government.

However, it says this would not solve the “underlying budget issue” caused by government underfunding, so it is “very likely” that it would need to take out more loans in the future.

Havering is not alone in facing a budget crisis. London Councils has warned of a £400m budget overspend this year due to a “perfect storm” of inflation, growing demand for services and “insufficient” government funding.

One in 50 London residents are estimated to be homeless and living in temporary accommodation provided by their council.

Cllr Claire Holland, acting chair of London Councils, said: “Borough finances are on a knife edge – with grim implications for the future of local services in the capital.”

To read the budget update, visit the council’s website: https://democracy.havering.gov.uk/ieListDocuments.aspx?CId=153&MId=7676