Agenda item

To scrutinise the revenue and capital proposals relating to the 2026/27 Draft Budget and the Medium Term Financial Strategy (MTFS) for 2026/27 to 2030/31.

At the outset of this item, Cllr Connor noted that some additional information had been provided to the Panel as a printed spreadsheet which set out details of savings which had been agreed in previous years but would be implemented during the forthcoming Medium-Term Financial Strategy (MTFS) period.

Details on the Budget for 2026/27 and the MTFS for 2026/27-2030/31 were provided by Neil Sinclair, Head of Finance (People), Jo Baty, Service Director for Adult Social Services and Cllr Lucia das Neves, Cabinet Member for Health, Social Care & Wellbeing.

Neil Sinclair introduced the report commenting that the Council faced an extremely challenging financial situation driven by continuing trends of increased demand and increased costs of services. A range of future pressures had been considered and it was forecast that at least an additional £30m would be required in 2026/27, mainly in adult social care and also temporary accommodation. £7.0m of new savings proposals for 2026/27 were included in the report, adding to the £14.9m of previously agreed savings proposals, which meant that a total of £21.9m of savings were planned for implementation in 2026/27. Brought together with the corporate assumptions about likely inflation and interest rates, it was estimated that the Council would need to apply for £57m of Exceptional Financial Support (EFS) from the Government in 2026/27. It was also estimated that a total of £71m of EFS would be required in 2025/26 – this comprised of the £37m of EFS that was originally forecast plus £34m of in-year overspend. The EFS received in 2024/25 was £10m. Chart 2 on page 43 of the agenda pack showed the forecast cumulative increases in the EFS over the MTFS period which was clearly not sustainable. Table 6 on page 45 of the agenda pack illustrated the breakdown of the budget gap.

Neil Sinclair commented that getting the EFS figures right was a complex process with a number of moving parts and that the final figures would not be confirmed until the accounts were closed for that financial year. The Council was doing everything it could to reduce expenditure, implementing spending controls and improving income collection. The Council would also continue to lobby the Government on the current funding system as it was not currently sustainable to meet the Council’s requirements.

Neil Sinclair, Jo Baty and Cllr das Neves then responded to questions from the Panel:

• Cllr Connor asked about the figures in Chart 3 on page 43 of the agenda pack which set out the forecast annual EFS interest charge. Neil Sinclair confirmed that the £6.1m of interest charges forecast for 2026/27 were already included in the overall budget forecast and EFS requirement for 2026/27 and also for future years. The EFS was repayable over a period of 20 years.
• Cllr Connor referred to the forecast in-year overspend of £34m for 2025/26, noting that £7.6m of this overspend related to adult social care. Asked whether the adult social care figure could be reduced, Neil Sinclair said that the direction of travel was currently positive and that spending controls were being maintained. Jo Baty added that, while demand was not reducing, there were a number of measures being used to maximise income, claim grants and improve joint funding arrangements. Culturally, the organisation had worked hard to make finance everyone’s business and the benefits of this were being seen. Other measures included the approach to commissioning with providers. Jo Baty acknowledged that this could be a particularly tricky area because of the Council’s objectives to ensure that people were paid the London Living Wage and that residents were provided with stability and good quality of care. She also noted that the complexity of cases coming through was rising and that some providers felt able to charge inflated prices which made the managing of commissioning costs so important.
• Referring to Table 6 (Budget Gap) on page 45 of the agenda pack, Cllr Brennan queried why the new pressures were £30m in 2026/27 but were projected to be approximately half of this in subsequent years. Asked how reliable these projections were, Neil Sinclair clarified that he could only comment on the adult social care element of this which was £10.6m out of the £30m of new pressures in 2026/27. £7m of the £10.6m figure related to placement demand pressures but there was also a further £8.2m of service pressures approved in previous years. There was therefore a total of £15.2m of placement demand pressures which were added to the budget on a recurring basis. Regarding the forecasting process for this, Cllr das Neves explained that a range of projections were calculated including best and worst case scenarios. However, the figures in the report were in the middle of this range. Neil Sinclair added that a number of factors were built into the forecasting with inflation set at 4% but other factors included the London Living Wage which would rise by over 6%. However, negotiations with providers on uplifts were ongoing.
• Cllr Iyngkaran requested further details on the assumptions behind the halving of the new pressures in the three years after 2026/27. Neil Sinclair said that he could only comment on the adult social care element which accounted for the assumptions at the MTFS projections set the previous year plus the gap from the current year. This would reach a level that the Council believed was sustainable going forward and then subsequent years included further increases to account for the increased demand and complexity that was anticipated. Jo Baty added that managing the rising levels of demand required improvements to the digital response and to the availability of advice and guidance, including signposting to other sources of support where appropriate. She reported that at least half of the demand at the ‘front door’ of adult social care did not lead to a Care Act Assessment.
• Asked by Cllr Brennan how the figures on pressures were adjusted in-year as actual costs become clearer, Neil Sinclair explained that pressures had been applied in previous years but that this was now being updated through this budget setting process as further pressures on top of this were now anticipated. The MTFS was updated each year which included all moving parts including pressures, savings, inflation and other factors.
• Cllr O’Donovan referred to paragraph 12.26 of the report which explained that the new savings proposed were relatively low because the Council was already committed to deliver £33.9m of savings and the priority was to unblock any barriers to delivery. Asked about the blockages in adult social care, Jo Baty said that capacity and staffing was a priority issue. She explained that some of the savings sat within commissioning which required recruitment to the team to deliver these. However, this had been delayed by liquidation of NRS Healthcare, which was the community equipment provider for residents. Other recruitment was also needed, for example to carry out reviews for residents who had been placed out of borough. This would enable the service to have the staffing capacity to be more responsive and work with partners to make the necessary savings and improvements that were required. However, there was always risk associated with organisational transformation. She added that the Mental Health Trust was also experiencing major change and so there could be difficulties in navigating their services to support some of Haringey’s most complex and vulnerable residents. Continuing Healthcare funding arrangements was also a difficult and complex area where savings for the Council was needed. Cllr das Neves added that the Health Service Journal had recently reported potential cuts to the Better Care Fund which was an example of regular changes that could impact on the Council’s finances and multiple systems that are under deep pressure.
• Cllr O’Donovan highlighted the importance of investing to save where possible and avoiding cuts that could lead to additional costs in future.
• Cllr Iyngkaran sought clarification on the forecast EFS charges in Chart 3 and whether this included the reduction of the capital amount. Neil Sinclair confirmed that this illustrated the interest charges only. The Panel requested further details on the scheduled repayment of the EFS as this was not included in the report. (ACTION)
• Cllr Iyngkaran asked about the impact of cost controls on the services received by residents. Cllr das Neves responded that the statutory duty to the Council did not change but there were other ways to control costs, including reform to the social care system which was fundamentally broken at a national level. She said that this was a necessary national ambition in the medium-term because the status quo was unsustainable with adult social care directors across the country unable to balance their budgets. Jo Baty added that demand could not be controlled but it could be managed better by the Council and services could be delivered more efficiently. This included the delivery of day services that were more relevant to the needs of residents for example.
• Cllr Connor referring to the huge scale of the budget gap over the MTFS period and to paragraph 13.6 of the report which stated that “In the future, not everything may be affordable, and the Council’s limited financial resources will need to continue to be prioritised to the most vulnerable”. Asked how this challenge could be addressed by adult social care services, Cllr das Neves reiterated the possible ways of driving efficiencies that Jo Baty mentioned earlier and the existing savings that were committed to, but emphasised that there wasn’t a huge amount more that could be saved in this area. She added that it might be possible to be more ambitious with invest to save proposals when the national themes became clearer. Jo Baty said that staffing was critical in order to get up to pace in certain areas including with Continuing Healthcare negotiations, to have someone leading on transition in commissioning, investing in the Carers’ Strategy and investing in digital. The 31Ten consultancy was also reviewing the effectiveness of the Council’s panel arrangements on financial decisions. There had therefore already been a significant amount of invest to save work.
• Asked by Cllr Brennan about savings on commissioning and procurement, Jo Baty explained that she chaired the Commissioning Board in adult social care with the work in this area being led by the Assistant Director for Commissioning & Programmes and that this area had been tightened following the procurement legislation to ensure that the service was in compliance. Going forward they would be looking for stronger representation in the corporate space. Cllr das Neves added that a lot of the spending in adult social care was led by a market management approach with others in the North Central London area and so the scope for further savings in this area was limited. Jo Baty added that there were also capacity issues because it was necessary to have enough operational commissioners to be able to provide assurance of the quality, safety and value for money of the provision on the ground.
• Following on from the previous point, Cllr Brennan noted that a report to the Audit Committee earlier in the week had made reference to the daycare placement out of Borough. Jo Baty explained that this type of placement was typically very expensive and there were now fewer providers in the market so the Council was making efforts to reduce spending in this area. Neil Sinclair added that the Director of Finance was leading a commissioning modernisation process across the Council to improve quality and standards. Cllr das Neves indicated that she would be happy to bring a more detailed report to the Panel in future on strategic commissioning as there were ongoing conversations about different ways of commissioning locally and with various partners. (ACTION)

Cllr Connor then summarised the areas discussed by the Panel and the recommendations to be put forward to the Overview & Scrutiny Committee as follows:

• The Panel noted with concern the risks associated with the cumulative projected budget gap of £192.5m between 2026/27 to 2030/31 as illustrated in Table 6 on page 45 of the agenda pack.
• The Panel referred to the significant annual levels of interest charges incurred by the Exceptional Financial Support (EFS) as illustrated in Chart 3 on page 43 of the agenda pack. The Panel requested that further details be provided on how the capital repayments were factored into future budgets in the MTFS period.
• The Panel also noted that, as stated in paragraph 13.6 of the Cabinet report, due to the Council’s limited financial resources, this may mean spending more in some areas of greatest need and priority and more significant reductions in other areas. It would therefore be necessary to understand further what this would entail for the future of adult social care services.
• The Panel expressed concern about the cuts to the Better Care Fund and the risk of the knock-on impact on adult social care services. It was recommended that this be monitored further by the Panel going forward. 
• The Panel welcomed the approach to invest to save through improvements to digital solutions but noted that similar proposals had been seen by Scrutiny in previous years that had not fully come to fruition. The Panel therefore noted a potential risk in the delivery of these improvements.
• The Panel felt that there was a particular ongoing risk over the rising costs from service providers within the adult social care sector and the potential impact of this on the modelling of anticipated expenditure over the MTFS period. The Panel made reference to the risk highlighted in the recent KPMG Value for Money Risk Assessment to the Audit Committee which stated that

o   “The Council does not have adequate procurement processes in place to enable it to achieve value for money in respect of contracts entered into for services received.”

o   “The Council does not have adequate processes in place to ensure that Adult Social Care spend is sufficiently forecast and managed” (page 43, agenda papers for Audit Committee, 10^th Nov 2025).

It was recommended that the strengthening of procurement processes be monitored further by the Panel going forward. 

The Panel then focused on the pressures and savings that had previously been agreed:

• Asked by Cllr Connor whether the previously agreed savings were on track to be delivered, Jo Baty confirmed that she was confident that they could be delivered but that any areas that became a concern would be reprofiled. She added that the extra staffing capacity would be very helpful in every area of improvement and saving.
• With regard to deliverability, Cllr das Neves referred to the liquidation of the community equipment provider, NRS Healthcare, which was an unexpected event that had a significant impact on the Department. Provider failure was a challenging issue because of the need to obtain alternative provision while maintaining control over costs.
• Asked about the £300k cost under ‘Resettlement’ for 2026/27, Neil Sinclair explained that these were budget support adjustments which corresponded to -£150k figures in both 2024/25 and 2025/26.
• Cllr Opoku queried the adjustment on resettlement funding (partnership and communities). Cllr das Neves said that some resettlement work was funded by grant programmes and that the Council would be renewing its Welcome Strategy to continue supporting voluntary sector organisations skilled in resettlement and working with communities in an innovative way. She also welcomed the Government’s commitment to move away from one-year contracts towards longer-term funding as this improved the scope for effective planning. Jo Baty emphasised the importance of maintaining strong links with the voluntary and community sector and not relying on one organisation. This would help to make the system work for residents and ensure that they were directed to reach information, advice and guidance more quickly without the need to contact many different organisations.
• Cllr Connor noted that the saving on transitions resulted from fewer young people coming through the service but queried why this was the case when there was increased pressure on adult social services in the younger adults cohort. Neil Sinclair explained that assumptions around transitions savings and cost had been built into the budget two years previously. However, following a further piece of work in summer 2025, based on newer data about expecting numbers and the anticipated support needs, further savings had been identified. Cllr das Neves added that the younger adults bracket for adult social services was a very broad age bracket of 18-65 so demand in this area did not necessarily decline when there were lower numbers in transitions.
• Asked by Cllr Iyngkaran about transport costs associated with transitions, Jo Baty explained that entitlements could be different for the 18-25 age group compared to under-18s which she acknowledged could be a major issue for parents due to the changes in arrangements that could be required.
• With regard to Supported Living Contracts, Cllr Connor queried the joined-up approach between the Adult Social Services and Housing teams. Jo Baty confirmed that they were working with Housing and that this item involved moving from spot purchasing arrangements to block purchasing arrangements which tended to be less expensive. This was a complex area as different residents required different levels of support needs but there were also opportunities for collaboration locally.
• Cllr O’Donovan expressed concern about the reduction of the capital item for the in-Borough children’s respite facility on page 60 of the agenda pack. It was noted that this item would be scrutinised by the Children & Young People’s Scrutiny Panel on Tuesday 18^th November.

Cllr Connor then summarised the areas discussed by the Panel and the recommendations to be put forward to the Overview & Scrutiny Committee as follows:

• On the Supported Living Contracts item, the Panel emphasised the importance of ensuring that the housing capital projects would align with social care commissioning needs and anticipated levels of demand.
• The Panel recommended that further scrutiny was required on transitions, in partnership with the Children and Young People’s Scrutiny Panel, in order to understand the reasons for the reduced numbers despite the national trends appearing to indicate greater demand.
• The Panel noted that, of the previously agreed savings, there were no current concerns about these becoming undeliverable.

The Panel then focused on the new pressures detailed in Appendix 2 starting from page 61 of the agenda pack:

• Referring to paragraph 1.5 of Appendix 2, Cllr O’Donovan queried why the number of Younger Adults with a Physical Disability primary need was projected to rise by 28% (from 615 to 787) by March 2027. Neil Sinclair explained that this was part of an ongoing trend which was expected to continue. However, the size and cost of the care packages tended to be smaller than other cohorts. Cllr das Neves said that a significant part of the additional demand being seen tended to involved people in their 50s and early 60s with greater complexity of health conditions.
• Cllr Iyngkaran requested further detail on how the £3.6m figure for the Adult Social Care staffing cost pressure had been reached. Jo Baty said that the additional £3.6m provided the security that the service would have enough staff to meet demand, to fulfil statutory duties and to deliver required savings over the next three-year period. The business case and specific figures for this had been developed in conjunction with the HR and Finance teams. There would also be some reconfiguration of the team to meet needs in the areas of highest demand in the east of the Borough and also strengthening the safeguarding team. There would also be improvements in the delivery of the Carers Strategy including more staff undertaking care reviews. The additional funds would also help to ensure greater stability of staffing which had been an issue of concern in recent years. She added that there was a slide deck detailing the high-level posts that were being added which could be shared with the Panel (ACTION)
• Asked by Cllr Iyngkaran why there were no further new savings proposed beyond 2026/27, Jo Baty explained that it had been agreed with the Director of Finance that the focus needed to be on delivering the savings that had already been committed to, including the current in-year savings. However, further proposals were possible in future years.
• Cllr Connor observed that there had historically been challenges with the retention of social workers and asked how confident the service was about doing so with the new staff being brought in. Jo Baty responded that visible leadership and strong communications with staff were important elements of this, including being upfront about the improvements required and the challenges involved with delivery and the existing systems. A workforce race equality scheme was being implemented to help with career progression at all levels. Getting a solid workforce development programme in place would also help with this. However, she acknowledged the challenges involved with retention, particularly because staff in London did often change jobs on a regular basis.
• Asked by Cllr Connor about the pressures on staff to deliver the 10 areas of improvement specified by the recent CQC inspection. Jo Baty responded that the improvement plan had recently been delivered to an expanded leadership team. Further work on KPIs was required and a new performance framework for staff would be piloted which would help people to know where they fit in the improvement agenda and how they could contribute.
• Cllr Connor requested further details about the management actions set out in the table on page 61 of the agenda pack, Cllr das Neves said that this included using the public health grant effectively, maximising income in areas where the NHS contributed to services, the continued negotiations of Continuing Healthcare and the evidence base for Section 117 (Mental Health Act) work. It also included improved monitoring of providers so that charges were only made for actions that had been completed, such as visits for example. Asked to clarify why the projected savings were significantly higher in 2027/28, Neil Sinclair explained that this was due to the scaling up of work in 2026/27, the benefits of which would then be realised the following year.
• Cllr Brennan highlighted the importance of appropriate support and training for social workers given the public facing nature of their role. Jo Baty replied that a layered approach was required as different issues could arise at different levels. It was therefore important to ensure that staff had professional supervision and proper training as part of an efficient business-like approach. She added that the tone of the notes written by social workers could be a good indicator of training as these should be written in a respectful and non-judgmental way. Cllr das Neves spoke about members of staff that she had met who modelled all the right behaviours and that this type of staff would help others to develop.

Cllr Connor then summarised the areas discussed by the Panel and the recommendations to be put forward to the Overview & Scrutiny Committee as follows:

• The Panel welcomed the additional investment in staffing and highlighted staff retention as a potential risk as this could impact on the Council’s ability to fulfil its statutory duties. It was recommended that workforce issues be monitored further by the Panel going forward, particularly in relation to improvements to Care Act assessments.

The Panel then focused on the new saving on adult social care charging policy detailed on page 81 of the agenda pack:

• Asked by Cllr Connor for further explanation about the charging policy, Cllr das Neves clarified that this was not about failing to collect money but instead was about putting in more resource in order to carry out assessments earlier and managing the process better. This meant that people would be charged when they started to receive care rather than when they first had a financial assessment. The implementation of this involved an invest to save approach. Jo Baty added that Disability Action Haringey had recently won a contract (not from the Council) on information, advice and guidance and they would work with the Aged Debt Board on concerns about disabled residents who found out about the scale of their contributions at too late a stage. Support was also being provided to the Council by Safeguarding Circle to assist with managing safeguarding risks. Neil Sinclair added that the Council had not historically been good at managing debt and joining up different parts of the Council to support effective processes in this area. This change would establish better processes, including by ensuring that residents were kept up to date about their case and that debts were recovered before the accumulation of large sums. He added that there was a programme board looking at the collection of debt and the removal of unrecoverable debt from the books.
• Asked by Cllr Connor about the total amount of income generation expected from the proposal, Neil Sinclair clarified that this would be over £1m in total, but after accounting for extra staff costs this would be reduced to £909k.
• Cllr Connor said that this was a good initiative but queried why this money had not been collected in the past. Cllr das Neves acknowledged that some money may not have been recovered previously but the resource to reform this process had not previously been put in.
• Asked by Cllr Brennan about the assessment for people who could not afford care, Jo Baty explained that residents needed the right information, advice and guidance right at the beginning of the process so that they could make informed decisions. The proposal was about working in a person-centred way and to avoid circumstances where residents were building up debt to the Council. Cllr das Neves commented that some people were still unaware that financial contributions and financial assessments were required in order to access adult social care services. She added that she considered the proposal to be the right level of policy change and brought Haringey more in line with other Boroughs, although some local authorities were charging more to their residents.

On the new savings proposal, the Panel concluded that:

• This was a necessary piece of work and the income generation was welcomed by the Panel.
• The Panel had sought assurances that residents on low incomes would not be put in circumstances where they did not have access to care services and the Panel felt that this point had been answered to their satisfaction.
• The Panel expressed concerns that this policy change had not been carried out in the past as this could have achieved savings at an earlier stage. The Panel queried whether there were any other similar areas where practice was out of step with other Boroughs and opportunities for income generation may be being missed.

The Panel briefly spoke about the savings proposal on page 82 of the agenda pack (reduction of floating support contracts) which related to the housing-related support available to vulnerable residents. While this proposal was from the Adult, Health and Communities service, it was within the remit of the Housing, Planning & Development Scrutiny Panel and not the Adults & Health Scrutiny Panel. Cllr O’Donovan commented that:

• The proposal was to deliver a 35% reduction in contract value, and the floating support services would then prioritise those with the most complex needs and highest risk of tenancy breakdown with a focus on crisis intervention and short term intensive care.
• That other residents with needs that don't fall into those categories, may therefore seek support, advice and guidance through other welfare and financial inclusion services. It was also probable that some residents would not seek support and advice until a crisis was reached. 

Cllr O’Donovan recommended that if the proposal was agreed, the Adult & Health Scrutiny Panel should work with the Housing, Planning & Development Scrutiny Panel during 2026/27 in order to monitor this proposal and evaluate the impact on vulnerable residents. It was agreed that these comments be passed to the Chair of the Housing, Planning & Development Scrutiny Panel in advance of the Panel’s meeting on Monday 20^th November where this proposal was due to be discussed. (ACTION)

The Panel then focused on the reduction to the Locality Hub item on the capital programme as detailed on page 66 of the agenda pack:

• Cllr das Neves noted that the localities model was operational in the West, Central and East areas of the Borough. Her understanding was that, as the first Locality Hub in the East was based in a Council building, this could be part-funded through the Housing Revenue Account (HRA). In the Central area there were plans for a new health hub in the Wood Green area which would also accommodate some GP space, but there were some challenges with funding from the health sector on this. Further details on this would therefore be available at a later date.
• Asked why there were no further changes to the capital programme, Cllr das Neves said that the approach was not to overstretch and much of the current focus was on delivering revenue savings. Jo Baty acknowledged that there could be further proposals developed going forward and the Panel requested to be kept informed of developments. (ACTION)