Fresh warning over council finances amid £32m budget gap

Finance chief says 2025/26 budget gap is “significantly more” than what was ideal, reports Grace Howarth, Local Democracy Reporter

George Meehan House and (inset) Dana Carlin — George Meehan House and (inset) cabinet member for finance Dana Carlin

Haringey Council has warned residents it must make “hard decisions” after predicting a £32million budget gap for next year.

The new £32m figure is being blamed on demand for services growing faster than anticipated, particularly with adult social care and temporary accommodation costs.

Commenting on the first of three financial reports expected between now and February, the council’s cabinet member for finance, Dana Carlin, said: “Like most London councils and many more across the country, we are under real pressure.

“We have hard budget decisions to balance the books this year and they’ll be more to come before the financial year is out.”

As well as a 24% increase in over-65s, Cllr Carlin added the cost of temporary accommodation had risen by 68% across London and the cost of adult social care in Haringey by 10%. She also said the borough’s core government funding had experienced a “real terms” cut of £143m since 2010.

Speaking at a cabinet meeting last night (Tuesday 12th) Liberal Democrat councillor Pippa Connor asked what confidence the council had that the £32m gap would get closed before February when the 2025/26 budget will need to be agreed.

One of the options the council has suggested is to lobby the government for additional funding, however Cllr Connor warned this could lead to “future debt” or the need for the “disposal of council assets”.

Cllr Carlin said: “Going to the government for exceptional financial support would be the very last option that we would want to take. As a council we are doing everything, and looking at every single pound to make sure it is spent wisely.

“We’re anticipating by doing that, we’re not looking first at frontline cuts at all, but if we were to ask for capitalisation we’d have to do that work anyhow.”

Capitalisation directions or exceptional financial support allows local authorities to use capital resources, such as borrowing or capital receipts, to cover revenue costs. The government can grant capitalisation directions to help councils balance their budgets.

Haringey’s director of finance Taryn Eves said: “It isn’t unusual to have a budget gap at this position in the year but the scale and size of the gap is significantly more than what we’d ideally be looking at today.”

She added that work over the last six months to “understand demand pressures” had produced £18.8m of proposed savings across council services.

Taryn added: “I sit here now feeling like we have a much better grip on what those pressures are. We monitor our high-risk pressures on a monthly basis so I think that work over the summer has enabled us to get a grip. It isn’t where we’d want to be but I feel like we’ve got a really good handle on the pressures now.”

Labour councillor Mike Hakata asked the council to clarify its reserves position.

Cllr Carlin said: “We actually have low reserves in comparison to other boroughs and for the needs we have as a borough. A lot of the reserves are actually already required, for example the reserves for insurance or schools.

“Although next year [March 2025] we’re forecasting £43m of reserves a lot of that is already earmarked. Our general fund reserve is sitting at £15million, which is low.”

Cllr Carlin said that, previously, the council had been able to use reserves to “smooth over” budget pressures but it didn’t have the “reserve resilience to do that anymore”.

She added: “We’re not in a position where we have additional reserve capacity unfortunately, in Haringey, and that makes our position more vulnerable.”

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