Agenda item

To scrutinise a report on the business planning process for the 2026/27 Budget and five-year Medium Term Financial Strategy (MTFS) for 2026/31.

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

Cllr Carlin introduced the report on the draft 2026/27 budget and the 2026/31 Medium Term Financial Strategy (MTFS), noting that it set out the latest information on the risks and opportunities for setting a balanced budget in 2026/27 including details of the national context and inequalities within the Borough. She also highlighted the shifting demographics with Haringey no longer representing a cheap place to come and live. However, there were still increasing numbers of people aged over 65 and high numbers of people in insecure private accommodation.

Cllr Carlin, Josephine Lyseight and Frances Palopoli then answered questions from the Panel:

·         Cllr White referred to Table 5 on page 95 of the agenda pack (which set out the figures for the projected budget gap for 2026/27 to 2029/30) and noted that, according to paragraphs 11.4 and 13.3 of the report, the projections were already budgeting for the use of £37m of EFS in 2026/27 in addition to the budget gap of £44m. He added that the cumulative budget gap over the four years from 2026/27 to 2029/30 was over £161m, which appeared to be a very high figure in the context of an overall annual budget of approximately £300m, and expressed concern that this appeared to represent a financial cliff edge which was going to be difficult to avoid. Cllr Carlin acknowledged that the situation was very challenging but did not accept that nothing could be done. She said that it would not be possible for the Council to simply cut its way out of the problem as many of the viable cuts had already been made and because cuts to preventative services would result in higher costs in the future. It was therefore necessary to look much more deeply at what the Council does in order to make sure that everything that the Council delivered was necessary. It would also be important to look at any changes to the money coming in from the NHS and from central government in areas such as adult social care and homelessness.

·         Expanding on the previous answer, Cllr White highlighted paragraph 14.6 of the report which stated that, in the future, not everything may be affordable which may mean spending more in areas of greatest need and significant reductions in other areas. However, he noted that the majority of the Council’s revenue budget was spent on demand-led services and so major cuts in other areas such as parks or libraries may not be sufficient to meet the challenge. It appeared that there needed to be a funding source for demand-led services that was sufficient. Cllr Carlin commented that it would be necessary to look at what was driving the demand, whether this would level off in future and how this compared to similar Boroughs. The Council would also need to continue to push down on non-essential spend including by improving recruitment and management structures in order to run an essential and lean Council without damaging future resilience. Josephine Lyseight added that the Council would respond to the consultation on the government’s Fair Funding review on local government finance with the details of the settlement for 2026/27 expected in around November. The Council would also be working on opportunities for savings over the summer and also carry out scenario planning.

·         Cllr Connor referred again to the figures in paragraph 11.4 which assumed the use of £37m of EFS in 2026/27 and asked if the interest incurred by this borrowing had been accounted for in the projections for subsequent years. Cllr Carlin confirmed that this had been built in the future budget projections and added that this was also why the capital programme was an important consideration because borrowing would add to the budget gap. Cllr Connor requested that future reports should include a table which illustrated how much money was being used to pay interest on EFS and capital receipts, including details of the interest rates. (ACTION)

·         Cllr White sought clarification that EFS funding had only been agreed by the government for 2024/25 and 2025/26 so far but that the Council had budgeted for the use of EFS in subsequent years in the projections in the report. Cllr Carlin confirmed that this was the case and that, while the Council would continue to work on reducing costs and raising additional funds, the significant budget gap remained in current projections. She added that it was quite difficult to project financial outcomes several years into the future and that these figures only illustrated a projection based on a scenario where no further savings were made. Cllr Carlin added that the Council had a sizeable property portfolio and, while much of this included valuable community assets, there were some properties that were unused and were costing money. A detailed examination of the property portfolio was therefore being carried out. If money was raised and the borrowing requirement was reduced, then this would also cut the interest payments required in future years. Josephine Lyseight reiterated that the outcome of the Fair Funding review would provide greater certainty about the anticipated funding for future years and could change the projections.

·         Cllr Small requested further details on how the assumptions on year-on-year increases in costs were calculated and how the confidence in these projections could be scrutinised. Cllr Carlin reiterated that work was being carried out on the possible drivers of the increases in demand and, while it was not known whether those increases would actually happen, it would not be prudent to predict that they was going to stop. Another issue was that a large proportion of the increase in demand from those in the 18-64 age cohort was mental health related and there needed to be the appropriate level of support from NHS mental health services.

·         Cllr Small asked about the anticipated future recovery of bad debt, noting the significant write-off of debts set out in paragraph 9.3 of the report. Frances Palopoli commented that the Council had participated in an eight-Borough pool and recent recovery had been an overachievement. It was not assumed that this would continue at the same rate and so future projections were quite prudent. John O’Keefe, Head of Finance (Capital, Place & Economy), commented that when the budgeting and monitoring was carried out, it was not expected that all of the parking debt would be recovered and so this was factored into the bad debt provision.

·         Cllr Connor referred to paragraph 11.6 of the report about financial recovery and spending controls and asked how details of the work of the various panels could be brought to the Committee for scrutiny. Cllr Carlin agreed to take this request away and consider whether reports could be provided in future, possibly with the quarterly update reports. (ACTION)

·         Cllr Connor asked how the Committee could scrutinise the capital programme more closely, including potentially by tracking one individual project in detail. Cllr Carlin felt that tracking one project could be difficult but that she would speak to officers about this suggestion. (ACTION) She added that updates on the capital programme were included in the quarterly reports. Cllr Connor clarified that the reason for her request was that it was not always possible for Councillors to understand the reasons for capital underspends and whether this meant that key projects were not being brought forward or whether there were specific delivery problems for example. The purpose of the scrutiny would therefore be to understand the governance and how decisions were being made. Josephine Lyseight suggested that some kind of workshop or training for scrutiny could be an alternative way of improving understanding in this area. Cllr White emphasised the importance of the Committee having oversight of the new arrangements for decision making on the capital programme and on spending controls while the Scrutiny Panels needed to have oversight of pressures in its service areas. He suggested that next steps on this should be discussed outside of the meeting with Taryn Eves. (ACTION)

·         Asked by Cllr Lawton about oversight over school closures and the associated budget implications, Cllr Carlin said that Children’s Services would have a clear understanding of the financial implications. She also reiterated that the demographics of Haringey was changing with a higher proportion of older people while younger families were moving further afield.

·         Cllr Small suggested that the Committee should be able to see the modelling assumptions associated with the possible funding changes arising from the government’s Fair Funding review. Cllr Carlin responded that there should be a clearer indication of the likely direction of government policy in this area after the outcome of the consultation was published, which was expected in around October 2025. She added that there could also be transitional arrangements to implement any shift in funding policy but that the detail of this was currently unclear. The details of the funding settlement for 2026/27 was currently expected towards the end of November 2025 or early December 2025. The next finance report on the Budget and MTFS was scheduled for the Cabinet meeting in October 2025 but this would be too early to take the outcome of the Fair Funding consultation into account.

·         Cllr Connor reiterated the huge amount of savings currently required in 2026/27 according to the projections in the report and the reference to potentially more radical changes in paragraph 14.6 suggesting that there needed to be discussions at the Committee throughout the year on how this was progressing. Cllr Carlin commented that this was likely to emerge throughout the scrutiny of the budget process but that this could not be pre-empted. Josephine Lyseight added that the in-year scrutiny on a quarterly basis would be on the delivery of the previously agreed savings for 2025/26 while the proposed new savings for 2026/27 would be looked at through Budget Scrutiny. Cllr White responded that it was apparent that new savings proposals were unlikely to be able to fully address the budget gap illustrated by Table 5 in the report and so it was appropriate for the Committee to scrutinise the other work ongoing in this area about how the Council operates. He reiterated the agreement that there would be a meeting involving Taryn Eves to discuss appropriate scrutiny arrangements for this going forward. (ACTION)

·         Cllr Lawton expressed concerns about how further savings could be made without adversely affecting frontline services. Cllr Carlin agreed that this was difficult as the Council had already been experiencing substantial budget reductions over a number of previous years. As the specific savings had not been decided yet, it would not be until the budget setting process later in the year that these could be fully scrutinised. It was clarified that the savings for 2026/27 would be proposed through a paper to Cabinet in October 2025 and then examined by the Scrutiny Panels in November 2025 with recommendations finalised by the Committee in January 2026.