This meeting of the Hackney Council Scrutiny Panel provided an overview of the council's budget, key financial assumptions, and directorate spending priorities, and also reviewed the minutes from previous meetings and the scrutiny panel work programme for 2025/26. Councillors raised concerns about potential budget gaps, savings deliverability, and the impact of funding changes on residents.

Council Budget and Financial Strategy

The panel received an overview of the council's budget, financial challenges, and spending priorities for the 2025/26 fiscal year, as well as updates on savings proposals and directorate budgets. A projected budget gap of £51 million across the medium term financial plan (MTFP) was highlighted, along with concerns about a potential 13.1% loss of share due to the FAIR funding review¹. Councillor Robert Chapman, Cabinet Member for Finance, Insourcing and Customer Service, noted that the council had to rely on £10 million worth of reserves to balance the budget for the current year.

Naeem Ahmed, Group Director for Finance and Corporate Resources and Section 151 Officer for the Council, explained that the council has a statutory requirement to set a medium-term financial plan, which is essentially a three-year budget strategy. He also warned that the FAIR funding review is currently out to consultation and will have quite a significant impact on the budget in future years, and that hasn't been factored into our initial thinking. He stated:

the financial challenges beyond the £51 million aren't going away, and actually FAIR funding will have a detrimental impact on us. And it's difficult at this point to specifically say what that impact will be.

The panel discussed the impact of undelivered savings, the FAIR funding review, and the transformation programme.

• Savings Deliverability: Councillors emphasised the importance of delivering endorsed savings proposals to balance the budget and raised concerns about the impact of delayed savings on the budget for 2025/26 and beyond. Naeem Ahmed explained that when savings proposals are delayed, the council often has to draw down on non-recurrent reserves to balance the position.
• FAIR Funding Review: Councillors sought clarification on the assumptions used in the report, particularly the estimated 13.1% reduction in funding share due to the FAIR funding review. Naeem Ahmed explained that the exact impact was still uncertain, but the council was working with various bodies to assess the potential ramifications and lobby the government. Mayor Caroline Woodley added that London boroughs are working with Central London Forward[^3] to make the case around housing and children's services funding. [^3]: Central London Forward is a partnership of the 12 central London local authorities.
• Transformation Programme: Councillors sought assurance about the realisation of savings from the Transformation Programme and the avoidance of double accounting across different projects. Naeem Ahmed stated that the programme absolutely has to deliver and that the council had been working very closely with both the internal Transformation team, Kiran's team and our consultation, our commissioned partners.

Children and Education Directorate

The panel questioned Jacquie Burke, Group Director for Children and Education, about the forecast underspend in the corporate parenting budget, the increase in residential placement costs, and plans to mitigate the SEND deficit. Councillor Sophie Conway asked what plans are in place to mitigate this 16.5 million cents deficit if the statutory override ends in 2028? Jackie Burke responded that the statutory override has been extended to 2028.

Councillor Margaret Gordon asked about the uncertainty regarding parental fee income following the completion of the rollout of new entitlements the autumn, what the factors are there in terms of children's centers. Jackie Burke responded that the uncertainty will be around the take up of places from people from those higher incomes who would pay for the full cost of their childcare and our children's centers.

Finance and Corporate Resources Directorate

Councillor Alastair Binnie-Lubbock asked about the actuarial valuation of the pension fund, and sought reassurance about the fiduciary duty² on the pension. Councillor Margaret Gordon asked about the second home premium on council tax and the extension of the empty property premium. Niamh, Interim Director of Financial Management, responded that the level of empty homes has reduced, according to that information. So, we are collecting council tax in that area, but what we expect to get out is lower, which is, you know, we are quite low compared to other boroughs, but, you know, that impact on the collection fund with new homes coming on board and the way that we model it, we have time to manage that through the system.

Housing Revenue Account

The panel discussed the Housing Revenue Account (HRA) and the challenges of legal disrepair costs. Councillor Ben Lucas raised concerns about the ballooning frequency of legal disrepair cases and the significant overspend projection. He stated:

this is an existential problem for the council so what's being done about this because this is a problem that can only be going upwards at the moment unless it's being sorted

Rickardo Hyatt, Group Director Climate, Homes and Economy, acknowledged the seriousness of the challenge and outlined efforts to improve repairs and address the backlog.

Councillor Margaret Gordon asked how the £4 million overspend figure was reached. Rickardo Hyatt explained that it is based on previous year's performance in terms of outturn, the average number of cases coming through the system, and the average number of cases being closed down each year.

Adults Health and Integration

Councillor Ben Lucas asked about the 2.5 million overspend projection for 25 26 and the budget growth of 20 million. Helen Woodland, Group Director Adult Health and Integration, responded that the demographics of our population is aging people are living longer with complex conditions so all of the demographic trending that we're seeing and this is obviously not unique to Hackney is that the demand from adult social care is exponentially increasing.

Councillor Ben Hayhurst asked how the directorate was working with public health to improve the quality of life as people age. Helen Woodland responded that they work very closely with our health partners as well so there's a number of things that we are working on with both of those partners including things like our neighbourhood model and how we can identify very early the things that affect people's quality of life going forward and either prevent or delay or treat those things better so that people are healthier longer.

Climate Homes and Economy

Councillor Margaret Gordon opened up the question on some of the income from parking service and street scene where we've seen significant income shortfalls. Rickardo Hyatt responded that it isn't necessarily about income it's about behavior change and a lot of the income that we do have from parking services where we've seen spikes in the past it's based on new schemes being introduced across the borough and that's why we have to keep a close eye on our forecasting going forward but ultimately it is about compliance at some point with these schemes for the betterment of pedestrians and road users but also the importance of the environment of people complying with these parking measures.

Councillor Alastair Binnie-Lubbock asked about the £90k for review of how review of housing disrepair is rated as red on the risk register. Rickardo Hyatt responded that he thought he had covered this already.

Other Business

The panel also:

• Noted the minutes of the previous meetings.
• Discussed the scrutiny panel work programme for 2025/26, including suggestions from the public.
• Discussed the use of AI across the council, which will be further discussed at the next meeting.
• Were reminded of the budget scrutiny coming up on the 18th of September.