The Scrutiny Panel of Hackney Council met on Monday 01 September 2025 to discuss the council's budget, review the scrutiny function's work programme, and consider minutes from previous meetings. Key discussions revolved around the significant financial challenges facing the council, including a projected budget gap of £51 million and the impact of the Fair Funding Review, alongside updates on directorate budgets and savings proposals. The panel also reviewed the Housing Ombudsman's special report on Hackney Council's housing services and agreed on the terms of reference for the Budget Scrutiny Task and Finish Panel.

Council Budget

The meeting focused heavily on the council's budget, with presentations and discussions highlighting significant financial pressures. Councillor Robert Chapman, Cabinet Member for Finance, Insourcing and Customer Service, and Naeem Ahmed, Group Director for Finance and Corporate Resources and Section 151 Officer, provided an overview of the council's financial situation.

A projected budget gap of £51 million across the Medium-Term Financial Plan (MTFP) for 2026/27 to 2028/29 was identified. This gap is exacerbated by the council's reliance on £10 million of non-recurrent reserves to balance the current year's budget, leaving a forecast reserves balance of £41 million which could be further depleted if overspending continues. The council is already facing a £9.4 million overspend for 2025/26.

A significant concern raised was the potential impact of the Fair Funding Review, which analyses local government funding. Initial projections suggest Hackney could face a 13.1% overall loss of funding share, making it the ninth worst-affected London borough. This has not yet been factored into the initial budget gap calculations, and provisional grant allocations are not expected until late November or early December 2025. Mayor Caroline Woodley noted that lobbying efforts were underway with London Councils and other bodies to highlight the potential ramifications for Hackney and other London boroughs, particularly concerning the inclusion of housing needs in funding formulas and the refinement of children's services formulas.

The council is implementing a star chamber process to develop savings proposals, with some already approved by Cabinet in July and further proposals anticipated for endorsement in September. However, the deliverability of these savings is a key concern, with £3.7 million of general fund savings and £1 million of Housing Revenue Account (HRA) savings anticipated not to be achieved by the end of the year. Councillor Chapman stressed the importance of implementing decisions already made and understanding financial pressures on individual directorates.

Discussions also touched upon specific directorate budgets and cost pressures:

• Children and Education: A forecast £2.6 million underspend in the corporate parenting budget was noted, despite a 90% increase in residential placement costs since 2019-20. Jackie Burke, Group Director for Children and Education, explained this was due to budget growth and a social care grant, but also highlighted the challenging commissioning market for private residential homes. The £16.5 million deficit in SEND budgets, with a statutory override extended to 2028, was also discussed, with plans including relaunching the graduated response, increasing local SEND places, and piloting early years provision.
• Adults, Health and Integration: Helen Woodland, Group Director for Adults, Health and Integration, reported a projected £2.5 million overspend for 2025/26, a significant improvement from the previous year. However, cost pressures in Care Support Commissioning, Mental Health, and Provided Services were attributed to increased client activity, demographic growth, and the growing complexity of care packages, with unit costs rising substantially.
• Climate, Homes & Economy: Rickardo Hyatt, Group Director for Climate, Homes and Economy, highlighted pressures in Homelessness Prevention Services due to increased numbers supported and rising costs of nightly paid accommodation. Shortfalls in income from the Parking Service and Street Scene were also noted, attributed to factors like CCTV vandalism and behavioural changes, though increased parking fees were expected to mitigate some of this. Climate, Sustainability and Environmental Services faced a significant combined overspend driven by contractual and operational pressures, increased vehicle maintenance costs, and unachieved savings from the Commercial Waste company.
• Finance & Corporate Resources: Naeem Ahmed and Deirdre Worrell, Director of Financial Management, discussed pressures in ICT & Workplace, Facilities Management, and the Revenues Service. The Revenues Service faced increased costs of supplies and services and higher resident call volumes. Savings delivery in this directorate included a £0.7 million target for Council Tax income from second homes and empty properties, currently rated Amber due to consultation phases.
• Housing Revenue Account (HRA): Ricardo Hyatt and Steve Waddington, Director of Housing, detailed the precarious financial position of the HRA, facing spiralling repairs costs above CPI inflation. Legal disrepair cases were a significant concern, with a projected £4.4 million overspend. Alternative Dispute Resolution (ADR) was being reviewed due to lower than expected uptake and potential cost savings.
• Chief Executive's Directorate: Sandra Farquharson, Director of Human Resources, OD, noted that the VCS Grants Programme savings were rated Amber due to ongoing consultation and reliance on one-off funding. The Love Hackney saving was rated Red due to increased printing and distribution costs.

The council is also exploring the use of capital receipts to fund transformation projects, with a strategy approved for 2025/26. Several assets are recommended for disposal to generate capital receipts, including 18-20 London Lane, 14 Dalston Lane, and Land at Pearson Street. A new 15-year lease for 96-98 Leonard Street EC2 to Disco Wheel Ltd was also proposed, and the purchase of 161 Queen's Drive, N4 2AR, was recommended to increase temporary accommodation supply.

Scrutiny Panel Work Programme 2025/2026 and Public Consultation Report 2025

The panel reviewed the draft work programme for 2025/2026, which includes standing items such as Mayor's and Chief Executive's Question Time, quarterly finance updates, and performance monitoring. A new standing item on performance monitoring has been introduced following a recommendation from the Corporate Peer Challenge review.

A public consultation for the work programme closed on 13th June 2025, with 74 responses received. The suggestions, summarised in a report, covered a wide range of issues including antisocial behaviour, childcare costs, affordable housing, traffic management, street cleansing, housing disrepair, and the council's response to the Housing Ombudsman's report. Several suggestions also related to the council's investment in Israel and the use of AI. The panel was asked to review these suggestions and consider them for their respective scrutiny commissions.

Minutes of Previous Meetings

The minutes from the Scrutiny Panel meetings on 10th April 2025 and 12th June 2025 were presented for agreement. The minutes from the 12th June meeting detailed a discussion on the Housing Ombudsman's special report on Hackney Council, where Richard Blakeway, the Housing Ombudsman, presented key findings and recommendations. The council's strategic response, including the appointment of a new Cabinet Member for Housing Management & Regeneration and plans for multi-regulatory engagement, was also outlined. The panel agreed to establish the Budget Scrutiny Task and Finish Panel and approved its terms of reference, membership, and the appointment of Councillor Margaret Gordon as Chair.

Housing Ombudsman Special Report

A significant portion of the meeting on 12th June 2025 was dedicated to the Housing Ombudsman's special report on Hackney Council. Richard Blakeway, the Housing Ombudsman, presented the findings, highlighting challenges in culture, governance, and oversight, and fundamental areas needing strengthening such as repairs, record-keeping, and complaint handling. Key recommendations included establishing an effective quality assurance framework for complaints, producing a performance monitoring framework for scrutiny, improving record-keeping, and developing the internal governance framework. Mayor Caroline Woodley and Councillor Guy Nicholson, Deputy Mayor & Cabinet Member for Housing Management & Regeneration, accepted all recommendations and outlined the council's commitment to addressing the issues, including proactive engagement with regulators and residents. The Group Director for Climate, Homes & Economy acknowledged the long-standing financial issues affecting HRAs but expressed confidence in the council's commitment to implementing changes.

Other Business

The next meeting was scheduled for 12th June 2025, which would include the Housing Ombudsman report, the council's response, and proposals for the council's new performance monitoring process.

The meeting on 1st September 2025 also included a discussion on the Scrutiny Panel Work Programme for 2025/2026, with suggestions from the public consultation being reviewed. The panel was asked to review and comment on the public engagement report and the draft work programme.

The meeting was confirmed as held, and decisions were made.

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