A thematic brief analysis of Mayor Lutfur Rahman’s proposed budget for Tower Hamlets Council. What came before, and what to expect after…

A new series begins…

A cat and mouse game played between a maverick figure and the established institutional players and their practices. No, I’m not talking about Bobby Axelrod and the financial regulators, in the HBO hit series Billions. I’m talking about the storm created by Mayor Lutfur Rahman for his submitted budget for Tower Hamlets Council, 2023 – 26.

The scale of spending increases and change submitted has never been witnessed by the Council in its history. Causing a storm, first started off with a flutter of a comment on LinkedIn, then resulted in a hurricane in the legacy media, including the BBC.

So how did we get here? In one way, it can be explained in a series of hedges. A hedge is an instrument used by financial institutions to guard against movements in their underlying positions. In common parlance, a bet on the future.

In terms of Tower Hamlets Council’s current and future finances and services, it is explained by two sets of bets. First, by the Labour administration, 2015 – 2022, which resulted in increased council reserves and an electoral wipe out in May 2022. The other by Mayor Lutfur, the largest council services expansion and spending in memorable history.

Edited highlights of the discussion with Andrew Wood, full video below, including discussion of his twitter thread on the proposed budget for Tower Hamlets Council 2023-26.

Previously on Billions: The Labour Years

“And instead, my beloved, luck sent you back to me colder than ashes, later than shadow.”

Sophocles, Electra

When Labour took over in 2015. Luck was not on its side. First, you had external commissioners running the council. Second, there was a threat to funding from the central government through the proposed fair funding review. Tower Hamlets Council has three main sources of income: Council Tax; Business Rates; and Central Government Grants. Therefore, the third main pillar of funding might not exist or be drastically reduced.

In anticipation of this reduction, many London councils, including Tower Hamlets, went on a programme of austerity, cutting services and increasing council taxes. Then in 2016, Brexit happened, and the fair funding review was put on a back burner.

Instead of revisiting these assumptions, the Labour administration carried on with the cuts. Even though since the Covid-19 pandemic, our funding, and incomes actually increased. Sticking to the original bet and hedge, even though the realities on the ground and in the bank account have actually changed. 

A mistake which resulted in a double bubble for Mayor Lutfur Rahman, benefiting electorally from the cut to services and then inheriting increased reserves to reverse those cuts and actually expand services.

Graph showing the reserves being built up under Labour, and forecasted spending under Aspire. Courtesy of Andrew Wood.

Currently, on Billions: The Aspire Budget for 2023-26

“You get one life, so do it all.”

Bobby “Axe” Axelrod, Billions

Mayor Lufur Rahman is betting with his budget, is betting on an increase in Council income, through a combination of Council Tax, Business Rates and Government Grants. To hedge against this assumption, he is also embarking on a series of savings, unprecedented in Tower Hamlets Council history. So far, there has been little detail in the proposed savings. Will his luck hold, or will it run out?

Summary of spending increases which are political choices.

Next, on Billions: Details?

“Luck happens when preparedness meets opportunity.”


Damian Lewis as Bobby “Axe” Axelrod in BILLIONS (Season 2, Episode 03). – Photo: Jeff Neumann/SHOWTIME – Photo ID: BILLIONS_309_2459.R

The big outstanding question is the details of the savings proposed. In total, savings are required, £17 million in 2023-24, £16 million in 2024-25, and £5 million in 2025-26. An ambitious scale, never seen in the recent history of Tower Hamlets Council.

Summary of the proposed savings for 2023-26.

Leading to many questions, including does the Mayor and his officers have the capacity to implement such a scale of savings. Perhaps the answer can be found in the Mayor’s second article for Jacobin Magazine, where he talked up Community Wealth Building, by talking about a Tower Hamlets model, emulating the famous Preston Model.

A community wealth-building programme is initiated with detailed research on all council spending, looking at how it can be tweaked to have more of an impact on the local circular economy. This also acts as a Zero Based Budgeting Tool, forcing all council costs to go through a rigorous value-for-money audit. Perhaps, the details of the savings proposed will follow the research commissioned by the Mayor to kick-start his Community Wealth Building Programme, the ‘Tower Hamlets Model’.

We all look forward to the details…

Video discussion with Andrew Wood on Mayor Lutfur Rahman’s budget for 2023-26