Agenda item

Verbal Update from the Director of Finance.

The Committee received a verbal update on the Local Government Settlement for 2026/27 from the Section 151 Officer and Corporate Director of Finance and Resources, Taryn Eves. A summary of the key points is set out below:

• The previous update to OSC was in November, since then Corporate Finance had continued to work through all of the various parts of the budget in order to produce  a draft budget to present to Cabinet on 10^th February.
• In November a budget gap position of £57m was forecast. This was before any outcomes of funding reform were known, and was based on the latest estimate of pressures at the time, as well as an assumption that all new savings would go ahead as proposed.
• The provisional settlement was published on 17^th December, based on the outcome of funding reforms. The final settlement was expected mid-February.
• Core Spending Power (CSP) was set to increase by £49.7M over the next three years. CSP was made up of Council Tax and government grants. The largest proportion of that increase over the next three years was from Council Tax increases, which were assumed at 4.99% by the government. The draft budget report had already made an assumption of a 4.99% increase in Council Tax. This effectively negated £31.9m of the £49.7m increase in CSP.
• The published increase in grants was £17.8m over the next three years, of which just under £8m was in 2026/27.
• The Corporate Director of Finance and Resources advised that it was worth noting that the CSP assumed that Haringey’s Council Tax collection would be £151m. The internal estimate was that the figure would be £145m. The discrepancy was largely down to a number of assumptions made around collection rates and the Council Tax base. The Council had higher levels of Council Tax discount and exemption that the government had assumed. The Council Tax Reduction Scheme in Haringey was around £35m a year, and of that £17m was statutory and £17-18m was discretionary.
• In relation to the £17.8m increase in grants over three years from their published figures, when you compare what LBH was going to get against the assumptions made in the draft budget, the total benefit to Haringey was £12.4m. Of that £12.4m, £2.3m related to grants in Children’s Services, so the actual figure was a £10.1m increase in grant funding.
• The Corporate Director of Finance and Resources advised that her service had also been looking at budget pressures, keeping these under review in-year and regularly reviewing the under-spend position. The budget papers to Cabinet in February would be using the figures at Period 8, which was later in the year than was used for the budget setting process last year.
• The most up-to-date figure for the total budget pressures was just over £41m, and this was largely in line with what was reported in November. The biggest change was in non-service budgets, such as interest costs and Minimum Revenue Position. Corporate Finance had undertaken some financial modelling in the intervening period with the Council’s treasury advisor, Arlingclose.
• There were no new savings proposals that had come forward since the November report.
• The Corporate Director of Finance and Resources commented that that there should be a continuous process of looking to make cost reductions and management actions, and that this should be part of the organisational culture of the organisation.
• The public consultation process on the budget closed on 6^th January and officers were working through the responses that had been received. This would be submitted to Cabinet in February as part of the draft budget report.
• The budget report going to February Cabinet would be based on the assumption that EFS funding from the government would be approved in full.

The following arose as part of the discussion of this item:

1. The Panel sought assurances around whether there were any particular concerns about the direction of travel that that the Corporate Director felt that Members should be focused on. In response, the Corporate Director advised that no, she had provided the headline figures for the provisional settlement and that the big change was the further use of EFS and the impact that this had on interest costs in the General Fund and on MRP.
2. The Panel sought clarification around the previous statement that had been made in relation to government assumptions around Council Tax collection rates. The Panel queried whether this reflected the fact that government was not adequately funding Council Tax exemptions, or whether this was an ongoing political dispute between local and national government. In response, officers advised that the government made some national assumptions around Council Tax collection rates and on the numbers receiving a discount on their Council Tax. It was suggested that this was something that the authority should look into in the next 12 months, to better understand the drop in collection rates. The Committee was advised that in addition to assumptions made by the government, Haringey’s collection rate was lower than the authority would like. The number of properties in Haringey had increased by around 800 in the year, but that had no net improvement on the amount of Council Tax collected, which suggested that a number of these properties received either a discount or an exemption. 
3. The Corporate Director advised the Panel that the government calculated the national value of Council Tax at £2k per property, which was lower than the average (Band C) Council Tax due from a Haringey property. The Cabinet Member commented that previously Council Tax benefit was paid along with Housing benefit by central government. The administration of Council Tax benefit was devolved to local government by the Coalition government. The government then periodically cut the amount of grant funding it provided for Council Tax Support.
4. In response to a question, the Committee was advised that as per figures set out in the budget papers, by the end of the 2026/27 municipal year, the interest due for EFS was £8m and the Minimum Revenue Provision (MRP) was £2m. In 2025-26 those figures were £3m and £300k respectively. MRP was not due on EFS until the year after, and this factor contributed to the much lower figures for 2025-26.

RESOLVED

Noted