Agenda item

Report of the Director of Finance. To be presented by the Cabinet Member for Finance Corporate Services.

details of the proposed General Fund (GF) Budget for 2025/26; the Medium-Term Financial Strategy (MTFS) 2025/30, as well as the capital programme. It also includes the proposed dedicated school's budgets for 2025/26.

The Cabinet Member for Finance and Corporate Services introduced the report. It was explained that Haringey was a borough rich in diversity, creativity and talent. It was also noted that it was a borough where life expectancy dropped eight years from west to east and where levels of deprivation were amongst the highest in the country. It was explained that the Council’s driving ambition was to create a fairer and greener borough, where everyone could belong and thrive.

It was explained that it was within those parameters that the Council budget was set, noting that, after successive changes to the funding formulae from 2010, Haringey lost circa £143m to our budget. It was additionally explained that Haringey was also still considered an outer London borough for funding purposes (although an inner London borough for statistical ones) and receives less funding than our inner London neighbours. In the current financial year, like other boroughs, Haringey had seen significant increases in the demand for and cost of local services. It was particularly noted that there had been increases in adult social care and temporary accommodation and that the cost of temporary accommodation increased by 68% in London last year.

It was noted that, while significant savings were proposed, the Council had worked very hard to protect the local services that residents rely on and need.

It was explained that, in 2025/26, the Council would invest almost £1bn to deliver local public services. It was explained that the Council would build hundreds of new council homes, help hundreds of people into work, fix hundreds of roads and pavements, plant hundreds of street trees, among many other key actions to make this borough fairer and greener. It was explained that this was being undertaken, not only because it is the right thing to do, in a borough such as Haringey, but because many of local services were preventative. It was noted that further cuts to frontline services could result in increased costs to statutory services, with residents and the Council less resilient in the face of increased need.

It was explained that the Council applied to the government for a maximum of £37m in Exceptional Financial Support (EFS). It was explained that this was required in order for us to set a balanced budget. For the future, it was explained that the Council would continue to work to reduce costs and to make every penny count and minimise use of EFS as much as possible. It was noted that, in the longer term, the Council need fair funding reform from the government. The government is reviewing funding allocations to local government and is due to have proposals for 2026/27. The Council was pressing for change to make sure that funding is driven by local need.

The Cabinet Member explained that they were grateful for the funding allocated to the Council by the new government from the Recovery Grant, which was based on levels of deprivation and Haringey’s relatively low Council Tax base.

The Cabinet Member stressed that there were significant challenges but that the Council budget would start with local priorities, focus on the needs of local people and build towards our shared ambition of a fairer and greener borough.

The Vice Chair of the Overview and Scrutiny Committee and Chair of the Adults and Health Scrutiny Panel introduced scrutiny recommendations and highlighted:

• The difficulties of not having a settled budget before the end of February 2025. It was explained that there were concerns regarding the need for additional financial support to set a balanced budget in 2025/26.
  
  
• That Overview and Scrutiny Committees had asked for quarterly financial performance data.

• That the 2023/24 Statement of Accounts – External Auditors Annual Report published in January 2025 noted that the external auditors were not satisfied with the level of scrutiny of the 2023/2024 budget, that information provided at that point was limited, and that good scrutiny of the budget was optimal.
  
  

In response the Cabinet Member for Finance and Corporate Resources:

1. Stressed the difficult financial position of local authorities across London and that Haringey was not in a unique position in that regard. It was noted that there was an increased demand for statutory services which had amplified pressure on the Council’s finances. It was additionally noted that there were increased costs to delivery of statutory services, due to external factors, as well as an increase in the level of complex cases.

In response to comments and questions from Cllrs Das Neves, Gordon, Brabazon, Arkell and Cawley-Harrison, the following information was shared:

·         That Haringey had received around £16mil in new funding from the local government funding settlement. It was explained that some of this funding was part of a recovery grant which was based on local deprivation and capacity to raise income. It was additionally explained that there was a high level of funding within the homelessness prevention funding.

·         That it was estimated that there was around a £143 mil shortfall in funding in real terms from 2011.

·         It was explained that there was a need for Central Government to review the need of individual boroughs and that local authorities require a fairer funding formula to ensure equity and sustainability. It was explained that there was a positive direction of travel with the distribution of the recovery grant from Central Government.

·         That there was a need to remove the outdated definition of Inner and Outer London Boroughs, which limited funding considerably.

·         That around 61% of the budget was spent on adult’s, children’s and Temporary Accommodation services. 

·         That the Council had made an application for in year financial support.

·         That the report contained the maximum borrowing requests that could be utilised in order to develop a balanced budget. It was explained that the Council would, wherever possible, ensure that the maximum was not spent. It was additionally noted that the Council would utilise Capital Receipts to undertake works and that borrowing would be at the normal rates of around 5%.

·         It was explained that the Council expected that the funding that was allocated would be sufficient, but that there was an unpredicted level of complexity and need which had increased the cost of statutory services. It was explained that this was not a unique position, and that several other comparable local authorities had applied for exceptional financial funding. Officers noted that the borrowing rates would be dictated by the timing of the borrowing, so it was hoped that rates would decrease.

RESOLVED:

That Cabinet:

1.    Considered the outcome of the budget consultation as set out in Appendix 5, to be included in the report to Council.

2.    Approved the responses made to the Overview and Scrutiny Committee recommendations following their consideration of the draft budget proposals.

3.    Proposed that the Council approve the 2025/26 Budget and MTFS 2025/30 Budget, new budget requirements and savings proposals.

4.    Proposed that the Council approve the 2025/26 General Fund Revenue Budget, including specifically a General Fund budget requirement of £348.9m, but subject to final decisions of the levying and precepting bodies and the final local government finance Settlement.

5.    Proposed that the Council approve of the General Fund Medium Term Financial Strategy (MTFS) 2025/2030.

6.    Proposed that the Council approve that the overall Haringey element of Council Tax to be set by London Borough of Haringey for 2025/26 will be £1,717.56 per Band D property, which represents a 2.99% increase on the 2024/25 Haringey element and with an additional 2% for the Adult Social Care Precept amount.

7.    Noted the Council Tax Base of the London Borough of Haringey, as agreed by the Section 151 Officer under delegated authority (Article 4.01(b), Part 2, of the Constitution), as 82,589 for the financial year 2025/26.

8.    Proposed that the Council approve of the Capital Strategy 2025/26 to 2029/30, including the General Fund capital programme.

9.    Proposed that the Council approve of the strategy on the use of flexible capital receipts to facilitate the delivery of efficiency savings including capitalisation of redundancy costs.

10. Proposed that the Council approve of the 2025/26 Minimum Revenue Policy.

11. Proposed that the Council approve the Dedicated Schools Budget (DSB) allocations for 2025/26 of £253m.

12. Noted the funding to be distributed to primary and secondary schools for 2025/26 based on the figures advised to Schools Forum and submitted to the Education Funding Agency in January 2025.

13. Noted the budgets (including the use of brought forward DSG) for the Schools Block, Central Services Block, High Needs Block and Early Years Block.

14. Delegated authority to the Director of Children Services, following consultation with the Cabinet Member for Children, Education and Families, authority to amend the Delegated Schools Budget to take account of any changes to Haringey’s total schools funding allocation by the Education and Skills Funding Agency.

15. Delegated authority to the Section 151 officer, following consultation with the Cabinet Member for Finance and Corporate Services, authority to make further changes to the 2025/26 draft budget to Full Council up to a maximum limit of £1.0m.

Reasons for decision

The Council had a statutory obligation to set a balanced budget for 2025/26 and the report formed part of the budget setting process for setting out the forecast funding and expenditure for 2025/26 to be presented to Full Council on 3 March 2025.  As part of good financial management and transparency, this report set out the current funding and expenditure assumptions for the following four years in the form of an updated Medium-Term Financial Strategy (MTFS). The final budget for 2025/26, Council Tax levels, Capital Programme, Treasury Management Strategy, Housing Revenue Account (HRA) budget and Business Plan will be recommended to Full Council on 3 March 2025 following consideration at Cabinet on 11 February 2025.

Alternative options considered

The Cabinet must legally consider how to deliver a balanced 2025/26 budget and sustainable MTFS over the five-year period 2025/30, to be reviewed and adopted at the meeting of Full Council on 3 March 2025.

The Council had developed the proposals contained in this report in light of its current forecasts for future income levels and service demand.  These took account of the Council’s priorities; the extent of the estimated funding shortfall; the estimated impact of wider environmental factors such as inflation, interest rates, household incomes and, in some service areas, the legacy of the Covid-19 pandemic.