Agenda item

To scrutinise the provisional outturn for 2025/26 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 2025. The report provided for this item was originally submitted to the meeting of the Cabinet on 14th July 2026.

Attendees for this item were:

·       Cllr Johann Beckford, Cabinet Member for Finance & Corporate Services

·       Taryn Eves, Corporate Director of Finance & Resources and S151

·       Josephine Lyseight, Director of Finance and Deputy S151 Officer

Cllr Johann Beckford introduced the report for this item noting that it reflected a difficult set of financial circumstances for the Council and challenging national circumstances following years of austerity. Specific points that he highlighted included that:

• The Council had required £40.6m of Exceptional Financial Support (EFS) in 2025/26, which was a significant increase on the £10m required the previous year.
• The Council had spent £792m on providing services in 2025/26, including 5,890 residents using adult social care services, 4,671 using children’s social care, and 2,725 in temporary accommodation.
• Spending on the largest services was connected to the broader picture in these areas, such as a housing market that fed the need for temporary accommodation. The new administration would be open about the financial responsibilities that the Council had to address but would also be an outward looking and campaigning Council on the changes required at a national policy level.

Taryn Eves then added the following points:

• The £40.6m EFS requirement in 2025/26 was higher than the £37m figure that had been anticipated at the beginning of the year. However, it was lower than the £54m figure that was being reported at Quarter 3.
• There had been a £15.5m overspend on services. There was a range of overspends and underspends as shown in Table 1 in the report.
• There had been an underspend in adult social care which was largely due to holding down inflation levels in services that the Council commissioned.
• An ongoing pressure was temporary accommodation where there had been an overspend of £7m, although this represented a £3.4m improvement on Quarter 3. There had been some improvements due to the impact of initiatives that had been put in place but there were still high numbers in nightly paid accommodation.
• Environment & Resident Experience (E&RE) had a £5.8m overspend which was largely from the parking and highway service and slippage in the delivery of staffing savings.
• Finance, Procurement & Audit had a £4.9m overspend which was largely driven by the corporate property portfolio.
• The second part of Table 1 showed £6m of unallocated Corporate Contingency which contributed to the overall bottom line. It also showed a £2.9m underspend on the Treasury Management Charges resulted from lower borrowing due to a 40% slippage in the capital programme. It also reflected slightly higher interest rates on the balances that were invested during the year.
• The Dedicated Schools Grant (DSG) reported a £3.2m overspend which was entirely from the high-needs block. This had been an ongoing trend over the past couple of years which was not unique to Haringey.
• There was a £4.3m deficit on the Housing Revenue Account (HRA) which had required a drawdown of funds from the HRA reserves which had been reduced to around £15m. Relevant factors included a high level of voids and assumptions about the level of grant income which did not come to fruition.
• Table 2 in the report illustrated the progress against savings delivery. Out of the £29.3m of savings that had been set at the start of the year, £19.1m had been delivered by the end of the year which represented delivery of 65%. The individual services had performed well in the delivery of savings but there was a large shortfall in cross-Council savings.

Responses were then provided to questions from the Committee:

• Cllr Small observed that the burden to future taxpayers caused by the EFS had resulted from issues such as the previous failure to invest in council house building that was driving up temporary accommodation costs. He queried how the long-term effects of this were being modelled and how invest-to-save measures were being used to reduce the future burden.

o   Cllr Beckford agreed with the importance of investing in Council assets, including council housing which he noted that Haringey was recently known for, but which needed to be increased further and joined up at national level to address the scale of the housing crisis.

o   Taryn Eves added that the costs of EFS were high with about £70k of annual interest for every £1m borrowed which was then compounded year on year. Modelling had been carried out, including the anticipated budget gap in five years’ time. The financial controls in place helped to ensure good value for money but it was also acknowledged that investment in prevention and early intervention for demand-led services was also required. This was recognised in the three-year financial resilience plan which had recently been discussed at Full Council and the greatest potential for this was in reducing demand for adult social services and temporary accommodation. She added that the Council’s total level of debt across the General Fund, HRA and EFS was very high compared to the benchmarks and it was therefore necessary to assess the different elements. It was possible that some General Fund capital investment could be slowed to reduce borrowing while the business plan for the HRA and the investment in homes was in a more sustainable position.

• Cllr Gray observed that the most important element of invest-to-save in adult social care was in prevention, which could involve spending across other Directorates, but may take several years for savings to be achieved. The use of Council buildings to provide venues for community activities was also relevant to this.

o   Taryn Eves acknowledged that the ‘customer journey’ could go across a number of different services and that cross-Council change was the most difficult to deliver, but also where the greatest potential was. She explained that a corporate budget was held for invest-to-save purposes for this reason and that the services did not have spare budget available for this kind of investment. It was also possible to use capital receipts to invest-to-save, for example for transformation and service redesign. During the budget setting process, services were invited to submit business cases, either individually or jointly, on how to change services in a way that could improve outcomes and deliver financial savings. These proposals would be challenged internally as part of developing the business case and savings monitored over time if implemented.

o   Josephine Lyseight added that, during the course of the financial year, opportunities could arise across services that had not been part of the budget planning process. The Corporate Contingency part of the budget could be used to fund these type of initiatives when required.

o   Cllr Cawley-Harrison requested that future scrutiny budget papers should include trackers on invest-to-save items. (ACTION)

• Cllr Jenner referred to the comments in the report that EFS was not a sustainable solution and noted that, as previously observed, cuts in areas such as housing would add to the future financial burden. He therefore queried what an alternative sustainable solution would look like. Cllr Beckford agreed that it was important that short-term decisions did not make problems worse over time. He reiterated that the real terms cut in funding from central government was £143m since 2010 while demand for services had been rising over the same period and the Council was often reliant on very expensive care providers. He added that there were wider policy issues to address at a London-wide and national level including the need for investment in council housing and funding for schools against of backdrop of declining pupil numbers in London.
• Cllr Cawley-Harrison queried whether there could be greater capability for EFS than simply bridging a budget deficit, for example by maintaining a balanced budget until such time as a longer-term financial plan or transformation change was achieved. He also suggested that some Councils might end up using EFS to pay for EFS repayments until the system changed.

o   Cllr Beckford commented that a larger number of local authorities now required EFS and that, even following the recent Fair Funding review, the overall situation was only moving in one direction. Therefore, while the Council would continue to work to improve its financial situation, there also needed to be further conversations about sustainable funding with the government.

o   Taryn Eves considered that the government recognised the importance of invest-to-save measures but that the Council had not used EFS for this purpose due to the availability of funds from capital receipts. However, she would be open to having an open discussion on this at the time of the next EFS application if required. She agreed that there was a concern about eventually requiring EFS to cover the borrowing costs of EFS from previous years given that such a high proportion of the Council’s budget was used for statutory services.

• Asked by Cllr Cawley-Harrison what her greatest priorities were at the Council, Taryn Eves said that the aim was to be as realistic about what the Council could achieve and to take the organisation through a process over the next 12-18 months whereby it looked at everything that it did. This would involve looking at performance, outcomes and value for money and would require ongoing progress in a change of culture to make these issues a collective responsibility.
• Asked by Cllr Cawley-Harrison about his financial priorities in the short to medium-term, Cllr Beckford reiterated the points that had just been discussed about the need for invest-to-save initiatives. He also highlighted the importance of good governance over procurement decisions and how best to link procurement to social value and community wealth-building while maintaining good value-for-money.
• Cllr Cawley-Harrison commented that the recent KPMG audit report implied that the culture had not shifted sufficiently across the board within the Council to really understand the financial difficulties and queried what more could be done to embed a new culture. Cllr Beckford responded that, from conversations he’d had with the senior leadership, there was a good understanding at that level of the severity of the financial situation.
• Referring to the culture change issue, Cllr Small pointed out that savings delivery from the Directorates had been strong, as illustrated in Table 2, but that the cross-Council savings had not performed as well. Taryn Eves acknowledged that the savings delivery from Directorates had been strong and that there was direct accountability for these but that more input was needed for the cross-Council savings. She added that the delivery of savings was just one element of good financial management and so shifting the culture was required in various ways, including by being more ambitious about what could be achieved.
• Asked by Cllr das Neves about overspends in areas that were not demand-led, Taryn Eves explained that budget setting at the beginning of a financial year was based on a set of assumptions. While demand-led services were projected on the basis of scenario planning, projections for non-demand-led services tended to rely on other factors. An example of this was an estimate on how quickly outstanding rent/lease reviews could be progressed that was too ambitious. There could also be issues with unexpected spend which was where the corporate contingency budget could be utilised. Josephine Lyseight added that increased pressures on demand-led services could have on the other functions within the Council.
• Asked by Cllr das Neves how Haringey was performing financially when compared to statistically similar neighbouring boroughs, Taryn Eves confirmed that benchmarking was carried out in terms of spend and performance, particularly in relation to similar London boroughs and this was a key element of the value for money action plan. She emphasised that, while benchmarking did not necessarily provide answers, it did suggest lines of enquiry to explore and to understand what other boroughs were doing differently.
• Cllr das Neves queried how new in-year initiatives would be funded. Taryn Eves explained that there would still need to be conversations about the timescales for any new initiatives but that the corporate contingency budget could assist with unexpected spend or invest-to-save initiatives. However, this was not a large pot and so business cases would need to be carefully examined and some funding requirements may be in the following financial year. Reducing the EFS requirements was a key consideration for these decisions. There had been some broad modelling with these initiatives but they were still ‘work in progress’ with a mixed position overall.
• Cllr das Neves requested further details on how the corporate contingency fund was accounted for in the overall budget. Taryn Eves emphasised that it was unnecessary to think that decisions could only be made once per year when the budget was set and that in-year opportunities to reduce the EFS requirement should also be utilised. The 2026/27 therefore included a contingency provision of around £25m which was an increase from the previous year. In addition to this, inflation provision was also held corporately and could then be drawn down by services once details had been provided. The use of contingency funds followed a rigorous process.
• Asked by Cllr das Neves for further details on the targets, outcomes and anticipated discussions with the government over future EFS support, Taryn Eves explained that the Council had regular ongoing engagement with the Ministry of Housing, Communities & Local Government (MHCLG), including a recent update on the Council’s 2025/26 outturn position. The financial resilience plan would be developed over the summer with details of the anticipated financial position over the next three years over eight priority areas and value-for-money action plans. By September, there would therefore be a clearer indication about the potential for doing things differently, invest-to-save opportunities and future demand pressures. This would also provide an indication on the likely EFS requirement for 2027/28, with the formal application usually taking place in December.
• With regards to the discussion on the EFS requirement, Cllr Beckford commented that the projected requirement tended to vary significantly throughout the year so it would be better to have more confidence in the figures from the beginning of the year if possible. He highlighted policy issues of importance to the local community which could have financial implications such as the Council Tax Reduction Scheme, restrictions on the use of bailiffs and the returning of assets to the community which could generate new sources of income if used creatively. He also referred to working with large local partners to help fund community initiatives and cross-Borough conversations to learn from best practice in finances and service delivery. Cllr das Neves commented that it may be useful to explore some of these areas further at a future scrutiny meeting. (ACTION)
• Cllr Gray observed that some other Boroughs had implemented an additional voluntary levy for households that were willing to pay this and queried whether this could be explored as a means of investing in the borough for certain specific purposes. She added that it could also be used as a means of reducing future EFS liabilities which would allow for residents participating in the scheme to receive a small discount in their Council Tax in future years.

o   Cllr Beckford said that he welcomed creative policy making and learning from new initiatives in other local authority areas where possible. He cited the use of ‘green bonds’ to invest in community energy projects as an example of this kind of approach which may also be able to generate savings.

o   Taryn Eves commented that there were two separate points which could be taken away for consideration, including the practice in other Boroughs – a voluntary contribution scheme for specific priorities and the issuing of bonds. Both would require a degree of administration and so it would be necessary to understand the likely take-up of schemes such as this.

• Cllr Jenner referred to the underspend on housing benefit and the £1m improvement in Children’s Services which appeared to be one-off solutions but queried how these would impact on finances in future years. Taryn Eves noted that, at Quarter 3, Children’s Services had forecast a £2.9m overspend which then improved by just over £1m by the end of the year. Relevant factors had included the delivery of the 5% staff savings objective (by holding vacancies and reducing agency spend) and the clarification of ring-fencing rules on the Children’s Social Care Prevention Grant. These issues could recur to some extent in 2026/27 so this could be an area that the Children & Young People’s Scrutiny Panel wish to explore further. (ACTION) She added that placement budgets could be extremely volatile due to the nature of a small number of highly complex expensive placements.
• Cllr Jenner queried why the forecast income for Environment & Resident Experience (ERE) had not been realised. Taryn Eves said that there were a number of different issues relating to this service and suggested that this could be explored further directly with the relevant service officers through the Culture, Community Safety & Environment Scrutiny Panel. (ACTION) 
• Cllr Cawley-Harrison made a number of comments about forecasting and the budget items:

o   That there appeared to be a pattern in the in-year forecasting where the overspend peaked in Q3 before being improved by year-end. However, there was still a negative variance from the budgeted position at the beginning of the year.

o   That the corporate contingency was often used to offset unrealised savings at the end of the year.

o   That there were capitalised elements that had now been identified as needing not to be capitalised but there were questions relating to governance on how this had happened in the first place.

o   That there were questions on how the Council had gone for four years without being audited and therefore whether there were issues that could have been identified earlier.

o   That, while the spending review panel and the 5% staff savings target had reduced some spending, this could potentially be blocking some activity that could generate future savings. An example of this was a delay to repairs at a leisure centre that caused a loss of income.

o   That there were budget items described in the report as ‘digital’ but that there needed to be a clearer explanation on the specific details of these initiatives.

o   He also queried why the commercial property work was taking so much time as this was expected to be an invest-to-save initiative.

Taryn Eves responded to these observations with the following points:

o   That forecasting was never a science but that methodology could be applied using details of actual spend and assumptions about what was expected to happen by the end of the year. However, the forecasting of placements involved some risk. She acknowledged that the assumptions used could be documented in a more extensive and transparent way. Assumptions were owned by the relevant services but were challenged by the Finance team.

o   She agreed that the accuracy of the quarterly forecasts was important, partly because she did not want to request additional EFS from government if this was not necessary.

o   That corporate contingency was a reserve shown within the budget rather than externally. The quarterly finance updates showed the forecast position with and without the remaining corporate contingency. However, she would consider if this could be presently differently in future. (ACTION)

o   That Haringey was not unique in having a period without audit but that the Council was currently in its second year of audit through KPMG. In addition to the external audit and inspection processes, the internal checks and balances included having the right skilled staff and operating in an open and transparent way which encouraged issues to be resolved collectively. There was also a resilience review required through the EFS application process.

o   On the capitalisation issue, various issues had been uncovered and rectified. This had included capital schemes that were no longer going ahead but with the staffing costs still being recorded or capital schemes that were delayed meaning that costs couldn’t be capitalised in the current year. KPMG would be presenting their audit plan to the Audit Committee later in the week and this would include the build back assurance process which involved checks and balances over the next two to three years.

o   The extra controls added through the recruitment restrictions and spending control panel were a necessary part of shifting the culture of the organisation and requiring people to consider the justification for and effectiveness of spending money. She said that there were very few examples of when waiting for the decision of the spending review panel would result in a reduction of income. However, she acknowledged that some of the additional controls could not be a long-term solution and that it may be necessary to review the effectiveness of these processes soon because the controls involved the considerable use of officer time.

o   The commercial property work had taken longer than expected and there was a lot more to be done which would run for at least the remainder of the current financial year. This had been picked up by the annual governance statement, internal audit reports and the KPMG reports so the Council was being held to account for improvement in this area.

o   Commissioning, procurement and contracts had improved significantly over the past six months. These issues were also being closely monitored by the Audit Committee.

o   Around two years ago, each Directorate had been allocated an element of digital savings and asked to identify the potential for savings. However, three out of the five directorates were now reporting ‘red’ on this so this approach was not being used going forward. Digital opportunities and transformation would instead be managed as a whole service modernisation programme. This was part of the cross-cutting savings that were not currently delivering to timescales.

• Cllr das Neves asked about the anticipated impact of the Popular Assets Commission (PAC) on the corporate property work. Taryn Eves explained that the overspend and the overdue rent reviews set out in the report related to the commercial property estate while the PAC was largely about community assets which was a different asset class. Cllr Cawley-Harrison pointed out that they were not entirely separate because the same department would be providing the resourcing and oversight for both. Cllr das Neves observed that there was fluidity between what was considered to be a community asset and what was not.
• Cllr Small reiterated the previous concerns raised about the forecasting, noting that projections were typically at their worst at Quarter 2, before large readjustments towards the end of the year. It was therefore difficult to assess how well the Directorates were doing with forecasting.
• Cllr Small requested further details on the readjustments to the capital budgets.

o   Taryn Eves explained that there had been a concentrated piece of work when it was discovered that there was an issue with the capitalisation of costs. There was also ongoing work looking at bad debts provision across all services including a detailed piece of work on parking debts and also a project on adult social care income. It would be necessary to continue to check the bad debts provision going forward.

o   Josephine Lyseight added that every budget line was examined to identify risks and opportunities. The opportunities largely related to reviewing the reserves and how this could be used to improve the overall position. This should be done on an ongoing basis and not just at the end of each year.

• Cllr Cawley-Harrison observed that a large number of Council contracts were at values such as ‘24,999’ or ‘9,999’ and that there were often a number of contracts of the same value with the same provider. He queried whether this could represent the best possible value for money when values were defined in this way. He also queried whether one larger contract with the same provider could represent better value than multiple contracts. Taryn Eves suggested that a report on the Commissioning Modernisation Programme could be provided to a future meeting of the Committee and this was agreed. (ACTION) This programme had four workstreams and focused on the commissioning, contract management and the workforce skills and development. The figures of the contract values related to the rules and regulations above those values and compliance issues was also an element of the programme. She also chaired a Commissioning Board which examined a range of data on a quarterly basis.
• Cllr Small proposed that the Committee should carry out a ‘deep dive’ into the detail of the digital transformation work and this was agreed. (ACTION) Cllr das Neves added that this had been an ongoing area for a number of years and so it would be useful to consider what the experience of this had been, the further technological advancements in that time and understanding the approach of other Boroughs.

The Committee then raised questions about the Housing Revenue Account (HRA) and other issues:

• Cllr Jenner raised concerns about the proportion of void properties and queried what measurable improvements could be expected.

o   Taryn Eves acknowledged that there was a high level of voids and said that there was a specific piece of work to address this with a contract recently agreed at Cabinet to increase capacity. She added that voids did not just apply to social housing stock but also to some acquisitions purchased by the Council.

o   As the previous Chair of the Housing, Planning and Development Scrutiny Panel, Cllr Small commented that the voids situation had not changed much in the past year with a target set at 1% voids but with a figure of around 2% reported at the most recent meeting of the Panel. He added that, partly due to the Neighbourhood Moves Scheme, the voids were more likely to be a consequence of a high turnover of residents between properties rather than long-term empty properties.

o   It was noted that the new Housing, Planning and Development Scrutiny Panel may wish to explore this issue further later in the year. (ACTION)

• Cllr Jenner asked what support the Council was providing to schools in addressing deficits. Cllr das Neves referred to financial support being provided to one particular school and queried what a fair approach would be if a much larger number of schools required the same level of support. In response, Taryn Eves noted that there was significant finance and HR wraparound within the schools service for all schools, but that the Council also played an important role in working with schools and preventing them from getting into deficit or helping them to achieve their deficit recovery plan. She reported that the position of school balances was deteriorating significantly. She could not comment on the specific school referred to but said that the general policy was to apply a three-year deficit recovery plan. If a large number of schools required support at once then this would require more Council resources, would reduce income from the Council’s investment balances and increase the overall EFS requirement.
• Cllr Jenner queried the consequences of recruitment restrictions in terms of staff shortages in services for residents, such as the parks service for example, and how judgments were made about this. Taryn Eves emphasised that there were recruitment restrictions and not a recruitment freeze with a significant number of requests being approved by the recruitment panel. Various posts were also exempt from the restrictions. She added that the restrictions were necessary to obtain some grip and oversight on the number of additional staff being taken on and as part of the effort to address the Council’s financial situation. She acknowledged that there could be an impact on services, but that the recruitment panel did not wish to stop any recruitment that would generate income or was necessary to meet statutory requirements. She added that she was happy to look into the specific concerns about the parks service. (ACTION)
• Cllr Jenner commented that the distinction between recruitment restrictions and a recruitment freeze was significant and so it was important to make this clear in all communications, both internally and externally so that it was clearly understood that there was not a recruitment freeze. Cllr Beckford agreed with this point and said that the use of language on this issue was important to get right.
• Cllr das Neves requested clarification about how investment in services the associated trade-offs were currently prioritised in the absence of a Corporate Delivery Plan.

o   Cllr Beckford commented that the budgetary process was being worked through in a structured way and would be scrutinised by the Committee in due course but that, in the short-term, necessary decisions were being discussed between the senior officers and the Cabinet with consideration given to the potential knock-on effects on other budgets.

o   Taryn Eves added that it was always easier to consider these issues through the budgetary process where everything was looked at altogether, whereas in-year decisions could be more challenging. However, her role was to have oversight of all of the service areas and so, if choices were required, then this would be brought to the Corporate Leadership Team and the Cabinet. She reemphasised the need to look at all spending and to challenge whether it was necessary due to the Council’s financial position.

• Cllr Cawley-Harrison requested that future outturn reports include a breakdown on the treasury management position and the variation from the budget setting. (ACTION)
• Cllr Cawley-Harrison questioned whether the use of HRA reserves would have an impact on spending in future years. Taryn Eves commented that there would still be some pressures within the HRA, given the high level of voids which had not yet been solved and that work was ongoing to try to mitigate this. She added that further use of the HRA reserves over three to four years would bring the HRA to a similar position to the General Fund.
• Cllr Cawley-Harrison observed that the acquisitions work had not reached the targets with some rollover into the following year. He asked for further details of the resourcing available for this given that acquisitions paid for themselves as an invest-to-save measure. Taryn Eves explained that voids were also an issue here as the capacity to get properties operational had been slower than anticipated. The recently agreed new contract would help to improve this. It was agreed that this issue would be explored further by the Housing, Planning and Development Scrutiny Panel. (ACTION)
• Cllr Cawley-Harrison commented that aids and adaptations was also an area of work that could generate a return on investment but where there was slippage into the following year. In his experience as a ward Councillor, he said that aids and adaptation work could be slow to complete and suggested that a faster service would not only benefit residents but also deliver savings to the Council. Cllr das Neves suggested that this be explored further by the Adults & Health Scrutiny Panel. (ACTION)
• On digital transformation, Cllr Cawley-Harrison said that the savings on the new feedback system had not been achieved and asked what points of learning there had been. Taryn Eves confirmed that there had been internal and external learning points and Cllr das Neves suggested that this be brought back as a full agenda item at a future meeting. (ACTION)
• Cllr Cawley-Harrison observed that there had been a significant overspend relating to strategic property with pressures including business rates on vacant properties, repair and maintenance costs and bad debts provision. Taryn Eves confirmed that additional resources were being added, particularly to the commercial property estate as the Council needed to get to a point where it had a good baseline. As Corporate Director for that area, she was responsible for making sure that there was a return on investment from the additional capacity.
• Cllr Gray referred to page 118 of the agenda pack concerning ‘write-offs’ in debt categories and expressed concerns about how large some of the figures were, particularly on housing benefit overpayments and rent arrears.

o   Taryn Eves explained that there had been an historic issue where housing benefit had been overpaid around 4-5 years ago and had not been rectified. There had recently been a significant wider programme underway to look at housing benefit and it was established that a number of these repayments were not going to be achieved. These were therefore old debts that had not been written off yet.

o   Taryn Eves added that the largest proportion of the write-offs related to parking and that this related to a detailed piece of work on very historic Penalty Charge Notices (PCNs) It had therefore been necessary to increase the bad debts provision. It was noted that the Committee may wish to explore this issue further later in the work programme. (ACTION)

o   On rent arrears, Taryn Eves felt that this was not a particularly high value but committee to take this away and conduct a comparison on the previous year. (ACTION)

o   On council tax, Taryn Eves said that this was quite low but that a piece of work to look at the historic debt would be carried out later in the year to ascertain whether there could be a similar issue around debt that should have been written off.

• Cllr Gray referred to the migration from ‘legacy’ benefits to Universal Credit which many people had recently experienced and asked whether, in cases where there had been difficulties, this could have been a cause of rent arrears. Taryn Eves said that she did not have information on the specific details of this and would provide details in writing. It was suggested by Cllr das Neves that this information should go directly to the Adults & Health Scrutiny Panel for further consideration. (ACTION)