Barking and Dagenham Council lost more than £10 million on its regeneration strategy last year, councillors have been told. The local authority had hoped to generate almost £3 million in income from its housing and regeneration projects between April 2025 and March 2026. Instead, it spent some £7.6 million more than it brought in, leading to a budget overrun of around £10.5 million.
Financial Setback from Ambitious Strategy
The financial setback stems from an ambitious Investment and Acquisition Strategy (IAS) launched in 2016 to fund major schemes like the redeveloped Gascoigne Estate. However, the initiative has also left the council with some £1.2 billion in debt – the vast majority of the town hall’s £1.6 billion debt overall. Town hall leaders had predicted that the income from the regeneration projects would be enough to cover the costs of the borrowing and bring in extra cash for the council.
Factors Behind the Loss
Factors such as increased construction costs and rising interest rates mean the scheme has started to bring in less money than hoped. Papers presented to council leaders at a cabinet committee meeting on Tuesday show the council hoped the IAS would make a surplus of £2.8 million between April 2025 and March 2026. Instead it made a loss of £7.6 million – meaning the council’s IAS strategy was £10.4 million over budget by the end of the financial year.
Labour councillor Rocky Gill, who recently took over the finance portfolio, said he would be "spending a lot of my time" investigating the council’s investments. Cllr Gill told the cabinet meeting: “The whole point of IAS was to deliver an investment and regeneration of the borough, which crucially has been an important priority of the cabinet and the council.” He added: “I will be spending a lot of my time doing due diligence to work through the whole investment vehicle.”
Breakdown of Losses
A financial outturn report presented to the cabinet said the loss included £4.1 million on the IAS’s commercial property “due to additional direct costs and net borrowing costs”. The IAS lost another £3.5 million on its residential property portfolio. Council leaders agreed in July last year to wind down the IAS, with no new borrowing planned. This followed warnings that income had started to fall behind target due to factors such as inflation and rising borrowing costs.
Cllr Gill warned councillors that “interest rates are more likely to go up at the moment than down”, citing factors such as the recent war on Iran.
