Agenda item

To receive and make recommendations on the 2026/27 Draft Budget and Medium Term Financial Strategy 2026/2031.

The Panel received a report for their consideration and comment, on the Council’s draft 2026-27 Budget and 2026-31 Medium Term Financial Strategy (MTFS) proposals that related to the Panel’s remit. The report include the Budget/MTFS report that went to Cabinet on 11^th November, along with appendices that set out the General Fund revenue and capital budget proposals relevant to Housing and Placemaking. The report was introduced by Kaycee Ikegwu, Head of Finance and Cllr Carlin, Cabinet Member for Finance and Corporate Resources, as set out in the agenda pack at pages 87-160. Also present for this item were the Corporate Director of Adults, Health and Housing, along with the Director of Placemaking. Cllr Williams, Cabinet Member for Housing and Planning was present for this item and so was Cllr Gordon, Cabinet Member for Placemaking and Local Economy.

The report identified that the estimated additional budget requirement for Housing Demand in 2026/27 was £13.2m, consisting of £4.3m of previously agreed proposals and £9.9m of new proposals. The report identified £9.9m of proposed new budget pressures across 2026/27, £9m of which were attributed to an 18-19% increase in the cost of Nightly Paid Accommodation for Temporary Accommodation. The report also identified a £257k reduction in the Floating Support Contract as a proposed new budget saving. Furthermore, the report identified £1m of investment required to provide proposed reductions of £2.1m across the five-year period of the MTFS. This proposal related to incentive payments to private sector landlords to retain and grow private sector leasing housing stock, and thereby reduce the Council’s reliance on costly nightly paid and B&B accommodation. The following arose during the discussion of this agenda item:

1. The Panel sought clarification about how much of the circa £9m budget pressure related to Temporary Accommodation related to the decrease in availability of Private Sector Leased accommodation (PSL). In response, officers advised that the net impact of PSL was around £350k. It was highlighted that there was an invest to save proposal around incentive payments to PSLs and that this would be a net cost to the Council in the first year of the MTFS. Officers provided assurances that the proposals were a combination of some robust modelling, which the service had received external assurance on, including benchmarking against other London boroughs. Officers commented that Haringey

benchmarked favourably against other London boroughs.

b.    The Panel queried what assumptions were used in relation to the reduction in PSLs and what impact would the increase in the cost of NPA have from 2027 onwards. In response officers set out that they couldn’t really forecast beyond 12/18 months when it came to the cost of NPA due to the volatility in the market making it very difficult to accurately predict beyond this timeframe. It was also commented that the Renters Reform Bill would likely have an impact in this area. The Corporate Director advised that they had based the modelling for the invest to save proposal on a number of assumptions on income and expenditure over a three year period. A piece of work had been undertaken to look at transitioning from higher cost NPA to lower cost NPA, which it was hoped would have a positive impact on the overspend.

c.     The Chair sought clarification on whether it was the case that the modelling showed a reduction in PSL even with the invest to save proposal, it was just that the reduction would be less with the incentive payments. In response, officers confirmed that was the case and commented that they did not expect to have 100% take up of the incentive arrangements and that the service had been prudent in its modelling assumptions.

d.    The Panel requested a written response from officers in relation to the current position with Broadwater Farm in terms of the latest cost estimate and the likely timescales for completion. The Panel noted their general concerns about some of the big projects being delayed and the knock on impact that this had on loss of income and spiralling costs. (Action: David Sherrington).

e.    The Panel sought assurances from officers about how confident they were with their projections in relation to Housing Demand, given the £11.4m projected overspend in this area. In response, officers advise that they hoped to see an improvement in this projection towards the year end. It was set out that Haringey was one of many London boroughs that had seen escalating costs in TA and that the rate of the increase in costs was very difficult to project. Officers advised the Panel, that Haringey was a bit of an outlier in terms of the overall numbers of people in TA were fairly stable and the organisation was managing demand at the prevention and relief stage, as well as managing the numbers of people moving out of TA. There were around £6m of savings in this area to deliver over two years. Officers reiterated that it was very difficult to project demand and cost in a volatile market. Officers also set out that the numbers and cost of NPA may rise as the Council focused its efforts on reducing the numbers of B&B accommodation, which was the most expensive and least suitable type of accommodation.

f.      The Panel sought assurances around the invest to save proposal around floating support contracts and queried whether the 35% reduction in contract value was as a result of efficiencies or whether it was a refocusing of support to the most vulnerable. In response, officers advised that it was both. It was anticipated that there were some service efficiencies that could be made and that the service had some current vacancies. The contract varied in terms of the support it offered individuals and there was a recognition that better value for money could be driven by focusing on those most in need. Officers highlighted that there were also a number of VCS organisations that offered support in this area, and some of these were funded by the Council. In addition, the independence and early intervention team would include two tenancy sustainment officer posts, so the Council’s offer in this area was broader than just this one saving proposal.

g.    The Panel asked for more information in relation to the £262k budget pressure around legal recharges. In response, officers advised that this reflected a realigning of the budget to reflect actual spend in this area. The allocated budget and the actual spend on things like disrepair claims or landlord claims had not been aligned for a couple of years.

h.    The Panel raised concerns with the proposed saving in relation to floating support contracts. It was commented that this could be a false saving, in that it would cost the Council more in the long run than they would save in the short term. The Panel requested further assurances from Cabinet that there was a genuine financial benefit arising from this saving. In response, the Cabinet Member for Housing advised that she had become increasingly convinced that that the level of support offered by some of these contracts was so small that their impact was negligible, and that the Council should be targeting its support in this area to those who needed it most. The Cabinet Member also echoed the comments of officers that there was a range of other support available in the voluntary community sector. The Cabinet Member for Finance and Corporate Resources provided assurances that they were aware of possible additional costs arising in other areas and that this was considered when agreeing a saving proposal.

i.      The Panel also raised concerns with the latest performance on voids, as set out in the KPI update and questioned whether additional resources were needed in this area. In response, the Cabinet Member advised that there were three new contracts being put in place in relation to voids and that these should be agreed by Cabinet next month.

j.      The Chair commented that the Cabinet report made clear that the scale of the budget pressures is so severe that a fundamental rethink was required about how the Council delivered services. The Chair asked the Cabinet Member to elaborate on what this might mean in relation to the Housing Service and TA. In response, the Cabinet Member for Housing commented that this was a system issue that had built up over a number of years and that system change was required to resolve it. The Cabinet Member commented that the organisation was getting more support from the government in terms of grant funding and in terms of their support for Haringey’s house building programme and acquisitions programme. Officers advise that the homelessness prevention grant in the current year was £14m and that Haringey had also received an additional £813k in additional grants. Officers also highlighted a number of other areas of work that was being undertaken including move-on solutions for families and the homelessness prevention hub that would be co-located with Citizen’s Advice. The Corporate Director commented on the rent convergence programme and the increase in costs for TA. It was noted that this was a partial driver of the increase in bad debt provision, but it was projected that this would drive savings of around £1m.

k.     The Chair asked the Cabinet Member for Placemaking and Local Economy to elucidate on the £580k budget pressure identified in relation to Wood Green, as well as the £2.1m change to the capital programme in relation to Wood Green and Tottenham. In response, Cllr Gordon advised that the budget pressure related to the fact that a number of staff salaries were capitalised and that if the specific project did not go ahead, or if the project did not deliver a capital asset, the salaries would no longer be able to be capitalised and so would become a pressure within the General Fund. Officers added that a review of the service was being undertaken in the coming months.

l.      The change to the capital programme related to the Future High Streets project and the change was the use of additional match funding to reduce the need for General Fund match funding. There was no change to the project outcomes, just how it was funded. Officers advise that they would continue to explore similar outcomes for other projects. In response to a question, officers advised that the additional match funding came from central government.

RESOLVED

That the Panel scrutinised the proposals presented in the report and the appendices and provided the following recommendations to OSC:

1. That Cabinet provide further assurances around the proposed £257k saving in floating support contracts. The Panel is concerned that this may be a false saving and would like further assurance that there is a genuine financial benefit arising from this saving. The Panel is concerned that the short term saving from a reduction in tenancy sustainment may result in additional costs to the Council in the long run.
2. That further information be provided around how the Council plans to improve performance on turning around void properties and reach the 1% target.