The Employees' Consultative Forum of Harrow Council met on Wednesday 10 January 2024 to discuss the draft revenue budget for 2024/25 and the Medium Term Financial Strategy (MTFS) to 2026/27. The forum resolved to note the report and submit its comments to the Cabinet for consideration.

Draft Revenue Budget and Medium Term Financial Strategy

The Forum received a report detailing Harrow Council's draft revenue budget for 2024/25 and its Medium Term Financial Strategy (MTFS) to 2026/27. Councillor Paul Osborn, Chair of the Forum, highlighted the ongoing financial challenges faced by the council, noting that while the budget for 2024/25 was balanced, significant challenges remained for the subsequent two years.

Councillor David Ashton, Portfolio Holder for Finance and Human Resources, explained that the proposed budget for 2024/25 included a council tax increase of 4.99%. He noted that figures for 2026 and 2027 were largely based on assumptions due to a lack of clear direction from the government. The primary financial pressures were identified as the provision of Adults and Children Services, with planned budget increases of approximately £5.5 million for 2024/25 and an additional £4 million over the following two years. Fees and charges were also set to increase by an average of 7%, reflecting inflation. A better-than-expected final settlement had been received and set aside as a contingency.

The Chair elaborated on the financial situation, stating that while the average overspend for a London council was £10 million, Harrow Council had an overspend of £1.3 million as of the last reporting period. He stressed the council's lack of reserves, unlike other authorities, making it crucial to balance the budget and avoid overspending. It was noted that the council's reserves stood at approximately £16 million, with 80% of its income derived from council tax. Sharon Daniels, Interim Director of Finance and Assurance, confirmed that while 2024/25 was balanced, budget gaps of £19 million were projected for 2025/26 and 2026/27.

During the discussion, questions were raised about the potential for future council tax increases. The Leader of the Council, Councillor Paul Osborn, acknowledged the impact of inflation, which had been higher than anticipated. Councillor Ashton added that future increases might revert to 2.99%, aligning with a preference for smaller, inflation-matched or below-inflation increases.

Concerns were also raised about an increase in the budget gap compared to the previous year's minutes. This was explained as a result of using figures from last year's proposed budget, which had since been addressed to achieve a balanced budget for 2023/24 and 2024/25.

An update on the council's restructure and its aim to reduce senior management by 10% was provided. Ms. Daniels explained that most restructures were implemented in February 2023 and were due to be presented in the Q3 budget monitoring report, with all restructures either completed or in progress. There was also an aim to reduce the use of agency staff, who are more expensive than permanent employees, and to replace interim positions with permanent ones, while protecting front-line services.

The council's financial position was contrasted with the previous year, where a £10 million gap needed to be filled. The current situation allowed for more time to address future years' financial planning. The strategy of purchasing assets, rather than relying on temporary accommodation like B&Bs for homelessness, was highlighted as a way to alleviate financial pressures and retain capital assets. Regarding recruitment, the Chair clarified that there was no blanket freeze, but all new positions required sign-off, as recruitment freezes could create service pressures and hinder savings.

The Forum resolved to recommend that the report be noted and that the Forum's comments be submitted to the Cabinet for consideration.