Leader says official request for exceptional financial support comes as Haringey Council faces “mountain to climb” to balance 2025/26 budget

His Majesty's Treasury and (inset) Haringey Council leader Peray Ahmet — His Majesty’s Treasury and (inset) Haringey Council leader Peray Ahmet

Haringey Council has submitted an official government request for more money after leader Peray Ahmet warned they faced a “mountain to climb” to balance the books this year.

Amid growing turmoil in the borough ahead of the 2025/26 budget being finalised next month, the council confirmed it had used the “exceptional financial support” mechanism open to local authorities when facing “severe distress”.

It essentially means the Labour administration in Haringey now fears it won’t be able to balance the budget, which is a legal requirement. Failure to do this will force the council to issue a Section 114 notice, the local authority equivalent of bankruptcy.

The leader of the opposition Liberal Democrats on the council has called the situation “shocking and staggering”.

It comes after a financial report published in December revealed the council was now forecasting an overspend on the current financial year’s budget by more than £37million, while a similar amount needs to be found to close the budget gap for 2025/26.

These financial pressures have forced the council to rely on its reserves to keep the lights on, leaving them “exhausted”, according to its director of finance.

In the week before Christmas, the new Labour government issued its local finance settlement for councils, which allocated an extra £16m for Haringey.

But Cllr Ahmet said this was not enough to solve the borough’s financial crisis. “We welcome the additional funding that the government will provide Haringey next year including extra money to tackle homelessness – one of the biggest financial challenges,” the council leader said.

“But the government was never going to be able to reverse a decade of austerity in one budget and this new money still leaves us with a mountain to climb.

“Year on year we have worked hard to be efficient and find savings, all the time continuing to deliver the services that matter to our residents. However, rising costs and demand in adult and children’s social care, and the impact of the housing crisis, are becoming overwhelming.”

An exceptional financial support (EFS) order in local government is a mechanism used by the UK government to assist local authorities facing severe financial difficulties. To be eligible for such assistance, council’s must be facing significant financial challenges that cannot be managed through normal financial management practices.

Cllr Ahmet added: “We will continue to work hard to balance our budget but we want to have EFS as a potential back-stop – as part of responsible budget planning – in order to ensure we can maintain vital services for our residents.

“Haringey urgently needs a fair funding system for the long-term which recognises the needs of local populations and provides adequate resources to meet all the responsibilities that we have. We warmly welcome the government’s commitment to bringing forward a new funding system that does that and we stand ready to work with them on developing this.”

The council is currently consulting on more than £18m of savings to be implemented next year as part of its efforts to tackle its budget gap, but even this level of cuts is said to be insufficient.

Luke Cawley-Harrison, leader of the opposition Lib Dems, said in a statement: “All councils are facing tough financial times at the moment, but the majority have not exposed themselves to the size of budget gaps displayed in Haringey.

“The situation is shocking and staggering, but not wholly unexpected. We have warned for years that Labour needed to take the management of their finances far more seriously, but the council leadership has refused to face up to reality, borrowing millions to fund their capital programme as interest rates skyrocketed; poor management of contracts, assets and data; and chronically failing to meet savings targets and instead balancing budgets by using up reserves.

“Turning to the government should not be seen as a magic fix: it is a last resort, piling even greater pressure on budgets, often resulting in even more borrowing to repay through further cuts in a vicious cycle reminiscent of a pay-day loan.

“I really hope Haringey Labour is able to clean up their mess over the next few months, as if they can’t it will be residents who pay the price.”

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