Agenda item

To scrutinise the provisional outturn for 2024/25 for the General Fund (GF), Housing Revenue Account (HRA), Dedicated Schools Grant (DSG) and the Capital Programme compared to the original budget agreed by Council in March 2024.

The report provided for this item was originally submitted to the meeting of the Cabinet on 15^th July 2025.

Cllr Carlin, Cabinet Member for Finance and Corporate Services, introduced the report on the 2024/25 Provisional Financial Outturn. She informed the Committee that the cost of delivering essential services had outstripped funding, particularly in adult social care, children’s social care and temporary accommodation. An agreement had been made with the government for Exceptional Financial Support (EFS) to be provided but, due to the hard work of officers to make additional savings and through the use of contingency funds and reserves, the amount of EFS required had been reduced to £10m in order to balance the budget.

Cllr Carlin then answered questions from the Panel, with contributions to the responses also made by Josephine Lyseight, Director of Finance & Deputy S151 Officer, and Frances Palopoli, Head of Corporate Financial Strategy & Monitoring:

·         Cllr White acknowledged the work that had been carried out to make savings but expressed concerns that quarterly finance updates to the Committee throughout the year had continued to show a level of overspend. He queried what more could be done to tackle this. Cllr Carlin agreed that this was concerning and highlighted some contributory factors. She noted that the areas of additional spend were mainly related to statutory services which the Council was obliged to provide and the number of cases, for example in adult social care, had been rising in Haringey. The number of cases had also been rising in most other Boroughs and so there was a lot of work underway to understand the causes of the drivers of the demand such as ill-health. There was also strict monitoring of the costs of these services in order to minimise the levels of funds used. Cllr Carlin added that the Council did not always receive enough funds from the NHS for certain types of care packages and that there was an ongoing programme of work to address this.

·         Asked by Cllr Gunes about fair funding for local government services, Cllr Carlin said that conversations were ongoing at national and regional level but that, with pressures on national government finances, local government overall had not received a significant increase in funding. She added that there was also action internally, including the implementation of new spending control panels.

·         Cllr Connor observed that the proportion of proposed savings that were actually achieved appeared to be reducing year by year, suggesting that the nature of the savings required after previous cuts were now becoming more difficult. She queried how the Committee could have confidence in the savings proposals for 2025/26. Josephine Lyseight acknowledged that the proportion of savings being achieved had reduced and said that there were measures in place to strengthen the process for 2025/26.

·         Referring to paragraph 6.3 of the report, Cllr Connor noted that corporate budgets had underspent by £24.4m and queried the reason for this. Cllr Carlin explained that this comprised of a number of factors including the corporate contingency budgets and reduced borrowing costs resulting from the reductions to the capital programme. She clarified that the Council was still investing in the Borough, such as improvements to parks and roads, but that some major capital projects were no longer financially viable due to the Council’s financial circumstances and higher interest rates on borrowing.

·         Referring to the situation with the Council’s reserves, Cllr White queried whether there would be funds available over the Medium-Term Financial Strategy (MTFS) period which could be used to reduce the amount of EFS drawn down from national government. Cllr Carlin explained that there were small pots of money that were set aside for specific purposes but may not actually be needed, for example for unclaimed Council Tax overpayments by residents who had left the Borough. These small pots of money could potentially be deployed to reduce the EFS requirement on a one-off basis.

·         Cllr Small observed that in-year projections appeared to show the significant overspends about six months into the year with the subsequent position for the rest of the year remaining quite stable and on course with the revised predictions. Cllr Carlin commented that assumptions and predictions were made when the budget was set about anticipated costs and acknowledged that the trends could then become clearer during the relevant financial year itself. Asked by Cllr Small about the potential risk for optimism bias when setting a challenging budget, Cllr Carlin said that modelling on anticipated costs had been improved but the reality was that there was not enough money in the system for local authorities to meet the increased level of demand for services that they were facing.

·         Asked by Cllr Gunes about the future impact of the reduced levels of the Council’s reserves, Cllr Carlin responded that, while the levels of reserves were now low, they were not dangerously low because it had been necessary to maintain a certain safe level of reserves in different areas. However, she acknowledged that there were not sizeable amounts of reserves remaining to be used in future years. She added that the government did expect the Council to use its reserves in circumstances where the EFS facility was being used. Josephine Lyseight referred to the Appendix 4 table (on page 55 of the agenda pack) which set out the various reserve levels in greater detail. For the General Fund this included earmarked reserves specifically for ‘risks and uncertainties’ and for ‘contracts and commitments’. These reserves had been reviewed with a deep dive to understand whether they were truly committed and then driven down where appropriate to help with the outturn position. The reserves would be reviewed again this year in a similar manner. Josephine Lyseight highlighted the sections of the table which illustrated that the General Fund reserves balance in March 2024 was £67.4m and in March 2025 was £49.3m. Cllr Connor noted that, according to the table, the General Fund reserves balance in March 2023 was £97.2m and expressed concern that almost half of the overall reserves had been used in the past two years. Josephine Lyseight commented that the overspend on the budget had been an issue for a number of years now.

·         Cllr Connor queried why the Council had proceeded with borrowing £10m through the EFS facility, which would require the payment of interest, while there was still at least £49m in reserves that could be used instead. Josephine Lyseight explained that these reserves were earmarked for specific purposes and therefore could not be released. However, she reiterated that reserves would be subject to a further review during 2025/26 in order to limit any future EFS borrowing.