Haringey Council finance chiefs have yet to work out how they can fill the gap in its 2024/25 budget but say they’re “not in Section 114 territory”, reports Grace Howarth, Local Democracy Reporter

Finance chiefs at Haringey Council state the local authority is in an “exceptional” and “concerning” position with a budget still needing to be balanced by the end of February. 

While presenting a report on the council’s financial situation to an overview and scrutiny committee yesterday (Wednesday 18th) Jon Warlow, director of finance, said: “We are very financially challenged, but we’re not in Section 114 territory.”

Section 114 is the local authority equivalent of bankruptcy, with a number of councils issuing such notices in recent years, including Birmingham, Croydon and Thurrock.

In outlining Haringey Council’s draft budget plan and five-year medium term financial strategy (MTFS), Warlow said a balanced budget or an almost set budget would usually have been presented to members by this point in the year.

The council has a £16.3million shortfall to make up and “substantial work must be conducted” before the final budget report can be issued in February. The council is legally required to set a balanced budget each year.

Warlow said Chancellor Jeremy Hunt’s Autumn Statement in November left the council disappointed and that it was still waiting to see if the government was going to move on any of its positions before settling the final grant levels for the local authority.

However, the government has said it will halt the Household Support Fund, a £500m pot previously allocated to councils to support residents in paying utility and food bills, which will now end in March.

This week’s finance report also looked at the cash reserves set aside to meet unexpected future costs and stated Haringey’s reserves positions were “lower than average for a council this size”. The council has set an objective to improve this, and also further lobby the government on funding.

Warlow said that spending this year on adult social care, children’s social services and temporary accommodation, which are all demand-led services, caused the “size of budget gap” the council was now faced with.

As a result the council has had to allocate an extra £25.5m of growth in the 2024/25 budget.

The director of finance added that inflation and high interest rates had placed pressure on funding the council’s capital programme, further contributing to the “concerning” position the council was in. 

Liberal Democrat committee vice-chair Pippa Connor asked how confident the council was on the growth to the budget, and where money would come from to support it. 

Warlow said the expectation was the budget for demand-led services would need to be “dramatically increased” based on previous MTFS reports, which give five-year budget forecasts. 

He said: “We address the gap by seeing what we can do to affect our cost base, looking at efficiency proposals, service change proposals, or income proposals, to reduce that gap.”

Warlow said although the landscape would look “significantly different” come February, his expectation “at the moment” was there would still be a gap.

Labour committee member Alexandra Worrell asked what was the council’s assessment of its “level of waste and inefficiency” and said: “Are we confident we’re taking every step to reduce that before considering any decisions that will impact service delivery?”

Dana Carlin, cabinet member for finance and local investment, said she wouldn’t describe council actions as waste, stating they were looking to provide services in the most “efficient and cost effective manner”. 

Some examples Cllr Carlin gave included procurement, the process the council follows to buy goods and services, and that there would be “tighter corporate control” on the contracts. IT services would also be looked over with directorates and that a “rigorous programme to reduce agency staff” was in place.

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