Agenda item

Report of the Corporate Director of Finance and Resources. To be presented by the Cabinet Member for Finance and Corporate Services.

DECLARATIONS OF INTEREST MADE FOR THIS ITEM:

None

RESOLVED:

That Cabinet:

1. Noted the forecast total revenue outturn variance for the General Fund of £21.7m, comprising £16.71m base budget pressures and £4.99m non-delivery of savings
   
   
2. Noted the net DSG forecast overspend of £8.4m
   
   
3. Noted the net Housing Revenue Account (HRA) forecast overspend of £3.478m
   
   
4. Noted the forecast General Fund and HRA capital expenditure of £545.2m, which equated to 75.6% of the total 2026/27 budget position
   
   
5. Approved the revenue budget virements and receipt of grants as set out in Appendix 3.
   
   
6. Approved the proposed budget adjustments and virements to the capital programme as set out in Table 5 and Appendix 3.
   
   
7. Noted the debt write-offs approved in Quarter 1 2026/27, which had been approved by the Corporate Director of Finance and Resources under delegated authority or, for those above £50,000, by the Cabinet Member for Finance, as set out in the Constitution.

Reason for Decision

A strong financial management framework, including oversight by Members and senior management, was an essential part of delivering the Council's priorities as set out in the Corporate Delivery Plan and of meeting its statutory duties. This became more critically important than ever because of the uncertainties surrounding the Council's challenging financial position, which was impacted by Government funding, high demand for services, particularly for the most vulnerable, and the wider economic outlook. This created an ongoing reliance on Exceptional Financial Support in the current year and across the following five years. The additional funding received through the Fairer Funding Review was welcomed; however, demand and inflationary pressures across services continued to far outweigh the income the Council received from Government or was able to generate through its own local sources.

Alternative Options Considered

The reporting of the management of the Council's financial resources was a key part of the role of the Corporate Director of Finance and Resources (Section 151 Officer) in helping Members to exercise their responsibilities and, therefore, no other options were considered. The remainder of the report and the accompanying appendices set out the forecast financial position in more detail.

The Cabinet Member for Finance and Corporate Resources introduced the report.

The Cabinet Member explained that the presented quarter one (Q1) financial update highlighted the financial challenges facing many local authorities. The Council forecast expenditure of £374.8m for the financial year, £21.7m above the £353.0m budget approved in March 2026. The majority of the overspend related to base budget pressures carried forward from previous financial years, alongside the need to deliver additional savings in order to meet the Council's in-year savings target, particularly in cross-cutting areas. For the General Fund capital programme, Q1 forecasts indicated expenditure of £234.4m against a budget of £344.4m. Housing Revenue Account (HRA) capital expenditure was forecast at £310.7m against a budget of £376.9m.

It was explained that the Dedicated Schools Grant (DSG) forecast reflected an increase in pressures of £8.4m arising from higher-than-anticipated demand for SEND provision. The Housing Revenue Account was also forecast to experience additional financial pressures, primarily related to temporary accommodation expenditure. Measures had been agreed to increase the pace of bringing empty homes back into use through the procurement of a new multi-service contract covering refurbishment, compliance and remediation works. Progress had also been made in advancing the redevelopment of the Love Lane estate and acquiring additional homes in Wood Green to support the provision of council housing.

It was stressed that, while these actions were expected to help mitigate some pressures, the Q1 report demonstrated increasing financial challenges across a range of services. Demand for Council services continued to grow while available funding remained under pressure.

The Cabinet Member explained that housing demand remained a significant factor. The Council continued to provide temporary accommodation for households experiencing homelessness across the borough. Rising housing costs and pressures within the housing market continued to contribute to demand for support services.

It was highlighted that there were similar underlying pressures which had contributed to expenditure growth in other service areas, including Adult Social Care and Children's Services. In many cases, demand-driven pressures continued to place significant strain on Council resources.

The Council continued to engage with other local authorities and stakeholders regarding the financial challenges facing the sector. This included participation in collaborative discussions and lobbying activity aimed at securing changes to local government funding arrangements and highlighting the impact of increasing demand and financial pressures on local services.

Following questions from Councillors Carlin and Emery the following information was shared:

• It was explained that Cabinet had worked with officers to determine where savings could be made and any reasons for any overspend. It was also stressed that the Council would work with opposition Members to review potential solutions. It was additionally stressed that the Council sought to campaign with Central Government to secure additional funding, as well as seek best practice across Local Authorities in London.
  
  
• The Cabinet Member stressed that the Council needed to ensure that child provision was of high quality to meet with need and demand, which did place pressures on funding.
  
  
• The Cabinet Member for Housing explained that there had been a reduction in the number of temporary accommodation voids over the last few months. However, it was stressed that there was still a significant pressure on temporary accommodation. It was noted that a significant cause for this pressure were the increases in private sector rent levels, which was not considered to be alleviated by Central Government legislation or support.
  
  
• Members stressed the need for robust Overview and Scrutiny work into the budget.
  
  
• The Leader explained that the Council had been in discussion with other local authorities in receipt of Extra Financial Support (EFS) regarding EFS and its implications on local authority funding. It was stressed that the framework was unsustainable long term and that this view had a wide consensus across the political spectrum of authorities in receipt of EFS.
  
  
• The Cabinet Member explained that the Council had noted that there had been an underachievement in rental income, which officers were looking to alleviate. It was explained that there were only Q1 figure, and that officers hoped to see improvement later on in the financial year.
  
  

RESOLVED:

That Cabinet:

1. Noted the forecast total revenue outturn variance for the General Fund of £21.7m, comprising £16.71m base budget pressures and £4.99m non-delivery of savings
   
   
2. Noted the net DSG forecast overspend of £8.4m
   
   
3. Noted the net Housing Revenue Account (HRA) forecast overspend of £3.478m
   
   
4. Noted the forecast General Fund and HRA capital expenditure of £545.2m, which equated to 75.6% of the total 2026/27 budget position
   
   
5. Approved the revenue budget virements and receipt of grants as set out in Appendix 3.
   
   
6. Approved the proposed budget adjustments and virements to the capital programme as set out in Table 5 and Appendix 3.
   
   
7. Noted the debt write-offs approved in Quarter 1 2026/27, which had been approved by the Corporate Director of Finance and Resources under delegated authority or, for those above £50,000, by the Cabinet Member for Finance, as set out in the Constitution.

Reason for Decision

A strong financial management framework, including oversight by Members and senior management, was an essential part of delivering the Council's priorities as set out in the Corporate Delivery Plan and of meeting its statutory duties. This became more critically important than ever because of the uncertainties surrounding the Council's challenging financial position, which was impacted by Government funding, high demand for services, particularly for the most vulnerable, and the wider economic outlook. This created an ongoing reliance on Exceptional Financial Support in the current year and across the following five years. The additional funding received through the Fairer Funding Review was welcomed; however, demand and inflationary pressures across services continued to far outweigh the income the Council received from Government or was able to generate through its own local sources.

Alternative Options Considered

The reporting of the management of the Council's financial resources was a key part of the role of the Corporate Director of Finance and Resources (Section 151 Officer) in helping Members to exercise their responsibilities and, therefore, no other options were considered. The remainder of the report and the accompanying appendices set out the forecast financial position in more detail.