Agenda item

To consider the in-year budget monitoring report as at Quarter 2 of 2025/26.

Taryn Eves, Head of Finance provided a comprehensive overview of the financial situation and budget planning for the council. Below is a summary of her update.

Taryn emphasized the importance of the MTFS, which outlines the financial framework for the next five years. The intention is to present this strategy earlier in the year (in July) to set the foundation for the budget-setting process. The Director reported that the budget gap for the upcoming year (2025-26) had increased significantly. Initially projected at £14 million, it was now estimated to be around £50 million due to rising pressures in adult social care, children’s services, and housing. The council was actively working on identifying savings proposals to address the budget gap. A total of £18.8 million in proposals had been put forward for public consultation, which would close on January 5. The feedback from this consultation would be reviewed in January.

She acknowledged that the financial landscape was challenging, with low reserves and significant pressures on services and highlighted that the council’s reserves are currently at low levels, which posed a challenge for financial sustainability. This situation limited the council’s ability to use reserves as a buffer against financial pressures. She mentioned that there were different types of reserves, including committed reserves and risk reserves. Committed reserves were those that had been earmarked for specific purposes, while risk reserves were set aside to manage uncertainties and potential financial risks.

She indicated that there would be a review of the reserves to determine if any of the committed reserves could be utilized to help address the current budget challenges. This review aims to assess whether some of the older reserves, which may no longer be relevant or needed, could be released for use. She stressed the necessity of maintaining a prudent level of reserves to ensure the council can respond to unexpected financial challenges in the future. Exhausting reserves completely would undermine the council’s financial stability and ability to operate effectively.

The conversation about reserves was tied to the broader theme of long-term financial planning. She emphasized that while it might be tempting to use reserves to cover immediate budget gaps, it is crucial to plan for the future and ensure that reserves are available for unforeseen circumstances. The need for careful monitoring and management of budgets was emphasized, particularly in light of the risks associated with delivering the proposed savings.

She mentioned that the government had announced additional funding for local authorities, but it was uncertain how much of this would benefit Haringey specifically. The provisional local government finance settlement was expected to be published soon, which would provide more clarity on funding allocations. She highlighted the importance of long-term planning and the need to address not just the immediate budget gap but also the projected cumulative budget gap of £132 million by 2029-30. This required a focus on sustainable financial management and exploring invest-to-save opportunities.

She expressed a commitment to engaging with stakeholders and ensuring transparency in the budgeting process. This included working closely with various departments to identify savings and improve financial performance. She highlighted that simply cutting costs would not be sufficient to address the budget gap. There was a need to explore invest-to-save opportunities that could help reduce future demand pressures, particularly in areas like adult social care and children’s services.

The discussion underscored the idea that investing in certain services or programs could yield significant savings over time. For example, initiatives aimed at preventing homelessness or supporting individuals to live independently could reduce the costs associated with emergency services and long-term care. She mentioned that the council was actively looking at potential invest-to-save projects and how these could be integrated into the budget planning process. This involved assessing the feasibility and potential return on investment for various proposals. There was an emphasis on the need for collaboration between different departments to identify opportunities for invest-to-save initiatives. By working together, the council could leverage resources and expertise to maximize the impact of these investments. She stressed the importance of monitoring the outcomes of invest-to-save initiatives to ensure that they deliver the expected benefits. Establishing clear metrics for success would be crucial in evaluating the effectiveness of these projects.