The Scrutiny Panel of Hackney Council convened on Monday 07 October 2024 to discuss the Council's significant financial overspend, the Chief Executive's priorities, and the annual reports on complaints and member inquiries. The meeting highlighted a projected £36.7 million overspend for the current financial year, primarily driven by increased costs in adult social care, children's services, and homelessness prevention. Decisions were made to review the Council's budget and financial planning, with a commitment to addressing these challenges through a newly established Budget Recovery Board.

Quarterly Finance Update

The Council is facing a significant financial challenge, with a projected overspend of £36.7 million for the current financial year. This figure has increased substantially from the May forecast of £21.4 million. The primary drivers for this overspend are increased costs in adult social care, children's services, and homelessness prevention, particularly the provision of temporary accommodation for over 3,000 homeless families, which accounts for nearly £20 million of the extra spending.

Councillor Rob Chapman, Cabinet Member for Finance, Insourcing and Customer Service, acknowledged the severe financial challenges facing local authorities. He stated that despite £22 million in savings already made this year, the Council is now expected to spend £36 million more than planned. He emphasised that the Council is a secure, well managed council as equipped to deal with the situation as we can be, but stressed the need for longer-term, sustainable funding and targeted interventions in social care and homelessness.

Jackie Moylan, Interim Group Director of Finance and Corporate Resources, presented a detailed breakdown of the financial situation. She explained that the £36.7 million overspend is after applying £11.6 million in mitigation measures, including pausing budgeted revenue contributions to the capital programme and reducing the minimum revenue provision for borrowing. The Council's reserves are projected to be exhausted within three years if current spending continues.

The pressures are not unique to Hackney, with a London-wide survey indicating a forecast pressure of £526 million across 28 boroughs, with temporary accommodation being the number one pressure. Hackney's overspend is a significant portion of its net revenue budget.

Key areas contributing to the overspend include:

• Children's and Education: £8.1 million overspend, primarily in Corporate Parenting, Family Intervention Support Services, and Disabled Children's Services.
• Adults, Health and Integration: £17.4 million overspend, mainly in Care Support Commissioning, Mental Health, and Provided Services.
• Climate, Homes and Economy: £22.4 million overspend, largely due to Homelessness Prevention and a shortfall in Parking income.
• Finance & Corporate Resources: £0.6 million overspend, mainly in Strategic Property Services and ICT.

To mitigate the overspend, a Budget Recovery Board has been established, chaired by the Chief Executive. This board will focus on increasing accountability, reviewing expenditure trends, and developing cost control and spend reduction measures. Initiatives already underway include reviewing agency assignments, non-essential spending, and recruitment controls.

The Housing Revenue Account (HRA) is forecasting a breakeven position, but this includes £9.3 million in pressures, primarily due to increased staffing costs for repairs and legal disrepair cases, as well as rising material costs. Mitigations include releasing the repairs and maintenance contingency, reducing revenue contributions to capital, and drawing down from the Resilience Reserve.

The Council is also actively working to address the rising costs and demand for temporary accommodation. Management actions include acquiring two hostels, a lease deal for 300 properties at Chalkhill, and exploring further options to increase supply through the Local Authority Housing Fund. An external review by Campbell Tickell is also underway to analyse demand modelling and service effectiveness in preventing homelessness.

The Council is lobbying the government, in partnership with London Councils, regarding rule changes that impact funding for temporary accommodation, particularly the discrepancy between housing benefit subsidy rates and actual costs.

The updated Medium Term Financial Plan (MTFP), to be presented in November, is expected to show an increased budget gap due to these pressures, necessitating tough decisions and reduced spending in some areas to protect essential services.

Chief Executive Question Time

Dawn Carter-McDonald, Chief Executive of Hackney Council, outlined her personal goals and the Council's priorities. Her key objectives for her first year include fostering a strong values and culture, promoting equality and wellbeing, encouraging listening, and driving strategy and transformation. She highlighted the Council's commitment to being an anti-racist organisation and embedding equality throughout its operations.

Carter-McDonald acknowledged the significant workforce challenges, including workload pressures and the need for career progression opportunities. She also reported positive progress in building trust with residents, with 73% of residents expressing trust in the Council, an increase from 67% in 2022 and outperforming the LGA benchmark of 53%. However, she noted that 24% of residents still do not trust the Council, and further work is needed to understand and address the concerns of specific demographic groups.

Regarding opportunities with a new government, Carter-McDonald emphasised the Council's active engagement with central government through London Councils and the LGA to shape policy and secure funding. She highlighted the welcome extension of the Household Support Fund and the potential benefits of the National Wealth Fund Bill.

In response to questions about the budget situation, Carter-McDonald confirmed that the Budget Recovery Board would be making heavy decisions, including potentially a freeze on recruitment. She acknowledged the need for external expertise in stabilising financial situations, drawing parallels with the NHS, and stated that the Council is learning from peer reviews and other local authorities.

Hackney Council Complaints and Enquiries Annual Report 2023-2024

Simon Gray, Corporate Complaints Manager, presented the annual report on complaints and member inquiries. The Council received just over 5,300 stage one complaints, a sustained high level compared to pre-COVID figures. The average time taken to respond to these complaints has improved to 20.2 days. Housing services accounted for 46% of all complaints. Of these, 43% found fault with the Council, leading to apologies, corrective actions, or compensation. Stage two complaints increased significantly to 518, with housing services accounting for 69% of these. The Housing Ombudsman conducted 71 investigations, a substantial increase from the previous year.

Ben Bradley, Head of the Mayor's Office and Cabinet and Civic Support, reported on member inquiries. Over 5,000 inquiries were handled in 2023/24, with significant improvements in response times, now averaging 22.5 days. The majority of inquiries related to housing needs, housing, and environment.

Steve Waddington, Director of Housing, highlighted an increase in housing complaints, particularly concerning damp and mould, and acknowledged that the volume of complaints is far too high. He noted that the Housing Ombudsman's new code of guidance has led to higher standards of assessment. The Council is working to improve its response times, with 30% of stage one complaints now resolved upon receipt.

Councillor Clayeon McKenzie, Cabinet Member for Housing Services and Resident Participation, acknowledged that the current state of play is not ideal but expressed optimism about the direction of travel and the potential for real benefits to residents with a new IT system and sustained improvements.

Scrutiny Panel Work Programme 2024/2025

The draft work programme for the Scrutiny Panel was presented, including areas of focus such as the Council's use of AI, the transformation programme, public engagement, the corporate peer challenge, poverty reduction, and the climate action plan. Members were invited to provide comments and suggestions.

The meeting also included a minute's silence in remembrance of the ongoing catastrophe in the Middle East. Apologies for absence were noted, and the order of business was adjusted to bring the Quarterly Finance Update forward due to its urgency. No declarations of interest were made.