Where has all the money gone?

Anna Mahtani looks at the causes of Barnet Council’s massive budget deficit

Hendon Town Hall and (inset) finance chief Cllr Simon Radford, who is trying to close the council’s budget gap

Barnet Council is currently facing a £113.5million shortfall in 2027/28, making it one of the predicted largest deficits in the UK and the biggest in London. So how has the deficit become so big and what does the ‘Barnet Graph of Doom’ have to do with it?

A review by accountancy body Cipfa for the Ministry of Housing, Communities and Local Government (MHCLG) recently outlined Barnet Council’s shortfall. This report was commissioned as part of the approval process for the £79.6million in Exceptional Financial Support (EFS) that Barnet received to plug the gap in its budget for the current financial year, which followed similar borrowing of £55.7m in 2025/26.

The report showed the council was at high risk in 13 out of 18 categories, citing a lack of a “credible and deliverable savings plan” and an over reliance on “borrowing-backed EFS”.

“Loads of councils are going to be facing exactly this soon, if they’re not already facing it now,” said Greg Stride, a principal researcher at Local Government Information Unit (LGIU), a think tank working with councils across the UK. According to LGIU, 39% of councils will need to seek EFS in the next five years.

He told Barnet Post: “Barnet is, with some slight differences, a relatively typical example of what’s happening across the country in terms of temporary accommodation spend,” he explained. “The number of people who are homeless has increased as the cost of living crisis has gotten worse. And the cost of housing people has also increased at the same time.”

Back in December, research by the charity Shelter showed that Barnet had one of the highest homelessness rates in England, with one in 55 residents experiencing homelessness. Last year, cabinet member for housing Ross Houston told Barnet Post that the percentage of people seeking homelessness assistance had risen by 83% since 2022.

This was to meet their legal duty to provide social care and temporary housing for homeless people but, Stride said, this creates other difficulties: “The big problem is that all of these things that we think of as non-statutory, that we think of as changing a place to a nice place to live, they also have an effect on the expenses of the statutory services.

“If you have really nice parks and you can go out for a walk every day, then you’re likely to be healthier and happier than if you don’t have those things. Healthy and happy people tend to be less expensive.”

This other big factor in the impending crisis has been looming for the better part of two decades now. In 2011, Barnet Council released what has since been dubbed the ‘Barnet Graph of Doom’ – a document in which council officers calculated that, if government support didn’t increase, the council would eventually run out of funding for everything except social care and children’s services due to their rising costs.

“Since the post-war period in Britain, social care has been a local authority responsibility, which means there’s 153 different ways of doing social care. And that’s just England,” Catherine Needham, a professor of public policy and public management at University of Birmingham who focuses on social care, told the Post.

Whereas the Beveridge Report in 1942 laid the foundations for Britain’s welfare system, in practice social care was largely left to local authorities under the 1948 National Assistance Act.

According to Needham, this meant the government never came up with a “financially feasible approach to disabled people, older people, people with mental health conditions and carers.”

She added: “Since [the Barnet Graph of Doom was published], we’ve seen a massive cut in the budgets of local authorities at the same time as increasing demand for social care.”

Needham explained that due to an ageing population and changes in people’s general health and long-term conditions, demands for health and social care services will continue to rise.

“The budgets that local authorities have are not sufficient to meet the legal requirements that they have to provide social care under the Care Act,” she said.

“Generally,” added Needham, “people don’t understand social care very well. They think it’s a bit like the NHS. They’re surprised when they find that actually, most of it’s run by private companies. And if you’ve got assets above the means test threshold, which is only £23,250, then you will be paying for it yourself.”

The result is that social care is currently simultaneously costing councils an unsustainable amount of money while also leaving a large number of people to pay the full costs of their care themselves. In 2021, the Office for National Statistics said around 36.7% of care home residents were paying their own costs.

“The problem is none of us know whether we’ll need it or not,” said Needham. “It puts an enormous amount of strain on social workers or local authorities having to make impossible decisions because they have not got enough money to go around all the people that need it.”

With regards to social care in Barnet, the Cipfa report said the council was in a “high-cost, average-outcomes position” where the demand and price of adult social care, children’s services and temporary accommodation “outpace transformation delivery, resulting in ongoing reliance on EFS and weakening financial resilience.”

Looking ahead, Greg Stride drew attention to how the government is trying to address these challenges with a multi-year financial settlement agreement and the recent ‘Fair Funding Review’. But, he said, these initiatives have their limitations: “[The Fair Funding Review] was one of those things where that was a good idea, in my view, to make sure that you took money from places that had loads and gave it to places that didn’t have as much. But the problem with it is it didn’t affect the size of the pie. It just affected how it was sliced up,” he explained. “And the issue is that we need more pie, essentially.”

Likewise, Needham argued that councils need more funding: “There’s been lots of political promises but actually a real lack of delivery. So, we’ve just limped on in this system where it just, everybody knows that there is not enough money to meet the demand.”

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