The Overview and Scrutiny Committee met on Monday 19 January 2026 to scrutinise the council's draft budget and medium-term financial strategy, and to review the Treasury Management Strategy Statement for 2026/27. Key discussions focused on the significant budget deficit facing the council, the reliance on Exceptional Financial Support (EFS), and the sustainability of borrowing levels.

Scrutiny of the 2026/27 Draft Budget and Medium-Term Financial Strategy 2026/2031

The committee reviewed the recommendations arising from the Scrutiny Panels' examination of the draft budget and the Medium-Term Financial Strategy (MTFS) for 2026/27 to 2030/31. A significant concern raised was the council's substantial budget gap, projected to be £57.2 million for 2026/27, and a cumulative gap of £192.5 million over the MTFS period. This deficit is largely driven by increasing demand and costs for statutory services, particularly in adult social care, children's services, and temporary accommodation.

The committee expressed concern about the council's increasing reliance on Exceptional Financial Support (EFS) from the government, noting that this is essentially borrowing that must be repaid with interest, leading to growing financing costs. The council's Section 151 Officer, Taryn Eves, acknowledged that the current funding structure is unsustainable and that more radical change and transformation would be required to address the budget gap. The committee recommended that budget reports should accurately reflect the structural financial issues faced by the council and make clear that the situation is unsustainable without increased local government funding or fundamental changes to service delivery.

Specific concerns were raised by the Scrutiny Panels:

• Adults & Health Scrutiny Panel: Highlighted risks associated with the cumulative budget gap and the interest charges from EFS. They requested further details on capital repayments for EFS and expressed concern about potential impacts on adult social care services due to limited financial resources. The panel also noted concerns about rising costs from service providers and the adequacy of procurement processes, referencing a KPMG Value for Money Risk Assessment. They welcomed investment in digital solutions but noted past proposals had not fully materialised.
• Culture, Community Safety & Environment Scrutiny Panel: Raised questions about leisure centre commercialisation, seeking more confidence in the projected savings and details of social value. They recommended that business cases for savings should be included in budget papers. Concerns were also raised about the Moselle Brook culvert repair budget, with a recommendation for a policy paper on maintenance plans and robust monitoring systems. The panel sought further details on the rationale for purchasing waste management fleet vehicles rather than leasing them and requested to see the business case. For tree planting, the panel requested more clarity on the figures and a more robust business case.
• Housing, Planning & Development Scrutiny Panel: Expressed concern about the proposed £257,000 saving from reducing floating support contracts, fearing it could lead to false savings and increased long-term costs. They requested further assurances on genuine financial benefits and the impact on tenancy sustainment. The panel also sought assurances on improving performance in turning around void properties and reaching the 1% target. They recommended that Cabinet provide further assurances on the sustainability of long-term borrowing costs for the Housing Revenue Account (HRA) and suggested an annual HRA debt management statement. They also recommended an assessment of tenant affordability regarding year-on-year rent increases.
• Children & Young People's Scrutiny Panel: Reported that previously agreed savings had been delivered and they were satisfied with new invest-to-save measures for foster care allowances and care leaver accommodation. They noted concerns about some schools running a deficit and the separation of school financing from the General Fund.

The committee also discussed the Treasury Management Strategy Statement 2026/27, acknowledging that the overall level of debt was unsustainable and higher than most neighbouring boroughs. While the HRA capital programme was seen as an investment generating revenue, concerns were raised about the sustainability of long-term borrowing costs and the impact on residents. The committee recommended greater clarity in future reports on how the HRA and General Fund debt management differ and the markers used for each fund. They also requested further details on the progress of the divestment policy.

Update on the Local Government Settlement for 2026/27

Taryn Eves, Corporate Director of Finance and Resources, provided a verbal update on the Local Government Settlement for 2026/27. While the Core Spending Power was set to increase by £49.7 million over three years, the majority of this increase was assumed to come from Council Tax rises of 4.99%, effectively negating much of the grant increase. The net increase in grant funding for Haringey was estimated at £10.1 million over three years. Concerns were raised about the government's assumptions on Council Tax collection rates, with Haringey's internal estimates being lower than the government's, partly due to higher levels of discounts and exemptions. The committee noted that the interest due for EFS and Minimum Revenue Provision (MRP) were significant, with EFS interest costs projected to rise substantially.

The committee recommended that budget reports should accurately reflect the structural financial issues faced by the council and make clear that the situation was unsustainable without increased local government funding or fundamental changes to the services delivered. They also requested that updated tables on the council's overall debt levels be provided as an appendix in future budget scrutiny reports.