The Barnet Eye has been on a mission since 2008, to fill the gap left by the demise of local press, in reporting to residents on the performance of Barnet Council. We believe that residents should be aware of what is happening at the Council. One of the reasons that we've had over four million views, is because people are interested. Todays blog is not about scoring party political points. It is drawing residents attention to the fact that we will be seeing some very steep rises in Council tax in coming years, to plug gaps in the budget that we believe are caused by years, if not decades of mismanagement of the councils finances.
Barnet Council has released very alarming papers for the forthcoming Council cabinet meeting. The news is not good. The council has managed to overshoot it's budget by over £38 million pounds. Around £18 million is being drawn down from the reserves, to cope, still leaving a shortfall of £20 million. We would like to draw your attention to key passages in the document, so that you are properly prepared for these increases and understand why they are happening. You may or may not disagree with what this blog has to say, but the sections in Bold are cut and pasted directly from the report. The text not in bold is what I believe this means for the people of Barnet.
The report summary says
This report contains a summary of the council’s revenue and capital forecast outturn for the financial year 2024/25 as at Month 3 (30 June 2024). The revenue budget projected outturn is for an overspend of £20.196m. This is after £18.3m of planned reserve drawdowns, and implementation of in-year recovery plans delivering £7.5m of savings. Significant further work is underway to ensure that expenditure remains within budget this year, given the very limited availability of reserves to fund any overspend. The report sets out the key pressures driving the overspend and outlines the work in place to contain it. The council’s capital programme expenditure forecast outturn for 2024/25 is currently £370.582m. As part of the work to reduce pressure in the revenue budget, the programme has been reviewed and the report recommends a number of changes. This report contains information on the level of debt and the top 10 debtors as at 30 June 2024 and any subsequent updates that Cabinet needs to be aware of that impact the debt position. As well as routine financial matters in regard to debt management and write offs.
The ovrrun is detailed in this graphic
In the papers, the council blames several causes for the crisis.
The council has, over many years and alongside the whole local government sector, faced growing financial pressures. These have arisen from several key trends:
- Rising quantity of demand for some statutory services, notably for older people and adults and children with disabilities
- Rising complexity of demand in some statutory services, notably for adults and children with disabilities
- Rapidly rising external unit costs, especially in children’s social care placements An ongoing housing crisis, placing pressure on demand for Temporary Accommodation (TA) and rising rental costs, resulting in a growing gap between the cost of TA and the amount recoverable through the Local Housing Allowance .
- For Temporary Accommodation, in non-Council owned properties, there is also a gap between the level of Local Housing Allowance (which sets the Housing Benefit paid to the resident) and the amount we can recover (which is 90% of the 2011 Local Housing Allowance)
- Reduced levels of grant from Government over a long period of time that have effectively halved the council’s budget, leading to greater reliance on locally generated income, which can be volatile
- Since Autumn 2022, significant inflationary pressures and higher costs of borrowing and other external market factors.
One thing in common with the previous administration, there is never a mention of the council mismanaging finances as a reason. If you are worried about 'overdevelopment' in Barnet, you should be. The report makes clear that they are seeking to encourage more development to attract Community Infrastructure levy payments from developers.They are also borrowing at record levels to plug the gap from such reciepts falling.
1.5 The council’s long-standing strategy, deployed over successive political administrations, of using its available cash to fund projects where possible, rather than borrowing to support those projects, has delivered benefits over a long period, with much reduced interest costs. However, falling receipts in several areas such as Community Infrastructure Levy mean that borrowing for necessary capital projects and purposes must now be undertaken at current higher interest rates, creating a significant pressure on the capital financing budget.
The report clarifies the role of this cash later in the report
Capital Grants & Contributions
6.18 The current capital programme shows £152.693m will be funded from Capital Grants. S106 and CIL are standing at £15.624m and £143.425m, respectively.
6.19 Capital grants are mainly received from central government departments (such as the Brent Cross grant from MHCLG) or other partners or funding agencies (such Transport for London, Education Funding Authority).
6.20 S106 contributions are a developer contribution towards infrastructure; confined to specific area and to be used within specific timeframe.
6.21 Community Infrastructure Levy (CIL) funds are developer contribution towards infrastructure; they can be used borough wide but still has time restrictions on use.
You may feel that it is unfair to say the council have mismanaged money, given the many external factors. The report demonstrates that the council does have the power to address this. The report says
3. Council Plans to tackle challenging financial situation
3.1 The council are implementing a range of initiatives to control costs and review areas presenting significant financial challenges, as per below:
➢ Re-introduction of controls on expenditure – to include;
• a new spending control panel
• approval process for all recruitment
• controls on overtime
• authorisations for entering into contracts
• discretionary spend controls
➢ Recovery Plans – Services have already started looking at areas for cost management and control, this will be an on-going process and run in parallel with the revenue monitoring timeframe.
➢ Transformation Strategy - Barnet has already embarked on a Transformation journey with schemes linked to the Corporate plan, with an invest to save approach to challenges faced by the council.
➢ Temporary Accommodation – strategies to reduce the cost of TA are being developed and drawn up which are likely to have a positive cost impact this financial year.
➢ Housing Benefit Subsidy - exploring opportunities, alongside legal advice, to alleviate the ‘gap’ in HB subsidy support.
➢ Capital Programme Review – re-prioritising existing schemes in the programme with a view to reducing borrowing requirement.
➢ Revenue Generation - exploring new revenue streams, including estate optimisation property development, and increased fees and charges for services
➢ Partnerships - engaging in partnerships with other local authorities, and community groups to share costs and resources, including regional commissioning approaches and market management.
➢ Digital Transformation - Investing in digital technologies to improve service delivery and reduce costs through automation and better data management
➢ Lobbying for support - Boroughs are lobbying central government for increased funding, more flexibility in spending allocations, and better support for local initiatives. Barnet is working alongside London Councils and responding to requests for areas of focus and surveys on financial challenges faced
None of the risks have suddenly popped up, so one has to ask why is all of this only being done now?
It also looks as if the council may be planning to fleece residents by making changes to CPZ parking schemes. Bear in mind the context of this raather waffly statement. It is in a document detailing how the council can plug a budget defecit.
4.18 A fundamental review of the Councils’ CPZ policy and policy principles is being undertaken to explore options that may facilitate greater flexibility for parking control design that better meets parking and resident need and expectation. The first year of the CPZ programme has been amended to utilise the flexibility incorporated within the existing Controlled Parking Zone policy to carry out the statutory process (as necessary) in consultation with the Portfolio Holder to implement parking controls in Borough Wards with urgent/priority need, or where there are demonstrable levels of support, whilst the fundamental review is completed.
The council are also getting worse at collecting council tax. Those of us that pay are increasingly covering the costs of those that don't
Collection Fund – Council Tax
7.2 The collection rate in June 2024 is 27.91%, this is 0.60% lower than June 2023, 0.46% lower than June 2022, 0.73% lower than June 2021, 0.65% higher than June 2020 and 1.11% lower than 2019 (pre-pandemic)
.To conclude, with increased borrowing, things will be getting worse. The report states.
8.12 A consequence of borrowing over 2024/25 is that there would be a further significant uplift to borrowing costs in 2025/26 as the full impact of annual interest on borrowing in 2024/25 (which would likely be done towards the end of 2024/25) would then be felt in the following period (as what has happened between 2023/24 and 2024/25 where £370m of borrowing was undertaken in 2023/24, but the uplift in interest costs is predominantly felt in 2024/25)
1 comment:
Really appreciate your thoughts and thinking Roger, this is such a helpful blogpost and glad to see you 'back in the game' here.
There is no doubt that there is a cash crisis and deficit, there is also a growing relational deficit with councillors and the wider community.
The future, once filled with hope, is looking bleak
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