Council bosses have issued stark warnings about what may happen if overspending cannot be controlled, reports Grace Howarth, Local Democracy Reporter

Barnet Council’s finance chief has said the authority’s latest spending forecast isn’t a prospect he’s “taking lightly”.

In a stark warning last night (Monday 18th) cabinet member for finance Ammar Naqvi said the council needed to close its projected £25million overspend for the current 2024/25 financial year while still delivering its essential services. 

If the higher-than-expected spending continues, however, the council could be left with just £1m in its pot of “un-ringfenced” reserves.

Local authorities fund their services primarily from government grants, business rates and council tax; however, the amount of support in the form of grants has decreased significantly since 2010.

As outlined in the council’s latest budget report, Barnet’s £25m budget gap is primarily down to a £1.7m increase in the overspend on temporary accommodation and a £3.7m rise in the overspend on adult social care.

Addressing Monday’s cabinet meeting, Cllr Naqvi said the temporary accommodation (TA) pressures were due to a combination of the housing subsidy gap and the cost of emergency nightly accommodation. 

The subsidy for TA has not increased at the same rate as the cost of providing the accommodation, which has “significantly increased”, and emergency nightly accommodation costs have escalated “beyond any historically precedented limits”.

Ross Houston, cabinet member for homes and regeneration, seconded Cllr Naqvi’s assessment, saying: “Pressures on TA are unprecedented. We have statistics that there are 90,000 children living in TA in London. 

“We had 950 new housing applications in quarter one this year. That’s more than double the amount a few years ago and that’s equivalent to ten new applications a day.”

He added the council received £7m to house the 950 new homeless families that applied in quarter one but, given the rate of demand, this wasn’t enough.

Cllr Houston said: “We’re not the only council that’s got this problem, we do have the sixth lowest council housing stock of any London borough despite being one of the biggest boroughs in terms of population, and I think it’s a perfect storm.”

He added the council needed to “lobby hard” to central government for additional and fair funding. 

Spending on adult social care is another big problem.

Paul Edwards, cabinet member for adult social care, said: “I think about 27 out of the 32 London boroughs are all struggling to meet the demands on adult social care within the budget constraints they have.

“It’s not just unique to Barnet, but because Barnet has a particularly growing elderly population there are even bigger pressures facing us here.

“For example, we know there’s been an over 14% increase in the number of people that we’re supporting since 2020, and that figure is going to continue to grow. That 14% increase is equivalent to about £1m a week.

“At the moment I can’t see how that figure is going to go down to any significant degree.”

Cllr Edwards said the £600m grant the UK government announced for local authorities to spend on social care for children and adults was a positive development. However, due to it being spent on not one but two services with “increasing” demand it wasn’t going to be the “panacea some people think it is”. 

Referencing years of national funding cuts, council leader Barry Rawlings said: “Part of the move to optimism is we now have a government that recognises those [pressures] rather than a government that started off talking about austerity and binding the belt that then became a straight jacket and left anemic councils to try and run under greater pressure.”

On the council’s reserves position, Cllr Naqvi said this was “stark”. 

The report highlighted that over a “long period” any gaps that couldn’t be bridged were “met through use of reserves”. As a result, the council’s un-ringfenced reserves have reduced by around £34m in three years. 

Starting off with £73.8m at the beginning of 2021/22, it has now reduced to £39.9m at the beginning of 2024/25.

Cllr Naqvi said: “It is naturally something that we have been alerted to as a matter of risk for the local authority by our external auditors and we don’t underestimate just what that means for future budget setting.

“The budget monitoring process has been as intense as it has been due to our reserves position.”

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