Council facing 'unprecedented' £16.3m budget gap as big cuts loom

Inflation, interest rates, demand for critical services and “conditions in the national economy” blamed by Haringey Council’s finance chief, reports Grace Howarth, Local Democracy Reporter

Haringey Council is facing an “unprecedented” £16.3million gap in next year’s budget which a new report says is “significantly worse” than earlier predictions.

In the report detailing the council’s plans for its 2024/25 budget, director of finance Jon Warlow says it will be “extremely challenging” to balance as they have calculated the council will be left with a £16.3m shortfall as things stand.

Despite achieving £11m in savings, the report stated “considerable further work” needed to be undertaken between now and February 2024 to plug the gap between income and expenditure.

In March 2023 the council predicted it would only have to make up a £6.3m gap but, due to “conditions in the national economy” along with inflation, increasing interest rates and demand for critical services such as social care and temporary accommodation, costs have risen.

In next year’s budget the council has set out “much higher” requirements for their most in-demand services, acknowledging a £20.8m overspend earlier this year which was largely due to adults’ and children’s social care.

The council has built in a £25.5m growth in spending solely for these services, with £20.4m for adult’s social care, £2.1m for children’s social care, and £3m for temporary accommodation.

However, the report acknowledges the “difficult” financial situation local authorities are in stating it’s perhaps worse than it has “ever been”.

A number of local authorities across England, including Birmingham and Croydon, have recently issued Section 114 notices after being unable to set a balanced budget, effectively declaring bankruptcy and barring them from making new spending commitments.

In a climate, community and culture scrutiny panel yesterday (Tuesday 19th) director of finance Jon Warlow said it was “unprecedented” at this point to still have this deficit.

“At this stage you could have a small budget gap, £1m or £1.2m, and that’s not unusual and that happens, to have one that is £16m is very unusual,” he said.

In terms of where the borough sits compared to other London boroughs, Frances Palopoli, head of finance, said: “We aren’t alone in looking at gaps this size.”

Explaining the process to close the gap, Warlow added: “Officers will continue to work on options to reduce the budget gap, between now and February, the council is under a legal obligation to set a balanced budget and it will for 2024/25.”

Local news needs your support

We are proud that we were at the forefront of reporting on the recent local elections. We can’t do this without the support of our readers.

Independent news outlets like ours – reporting for the community without rich backers – are under threat of closure, turning British towns into news deserts.

If our coverage has helped you understand our community a little bit better, please consider supporting us with a monthly, yearly or one-off donation.