The Waltham Forest Council's Budget Scrutiny Committee met on 3 September 2025 to discuss the medium term financial strategy, budget monitoring, and future scrutiny reports. The committee reviewed the proposed Medium Term Financial Strategy (MTFS) for 2026/27-2028/29, which outlined a potential funding gap of £15.331 million over three years, and the budget monitoring report for Month 3 of 2025-26, which showed a projected overspend of £31.412 million. The committee also discussed items for future scrutiny, including council tax, business rates, debt collection, consultancy spending and the procurement plan.

Medium Term Financial Strategy 2026/27 - 2028/29

The committee reviewed the Medium Term Financial Strategy (MTFS) ¹ for 2026/27 to 2028/29. The MTFS outlines the budget setting process and the council's financial strategy for the next three years. The report highlighted a potential funding gap of £15.331 million over the three-year period, assuming all service pressures are resolved. This includes a gap of £12.504 million in 2026/27, £0.993 million in 2027/28, and £1.834 million in 2028/29. The revised MTFS position assumes that the council tax referendum level will be applied at 4.99%, including a 2% precept² for adult social care for each of the three years.

The report noted that the financial outlook for local authorities continues to be very challenging, and the outcome of the funding reforms for local government (the Fair Funding Review) is likely to have a significant impact for London. Councillor Miriam Mirwitch, Chair of the Committee, asked for an update after the release of the policy statement.

The MTFS assumes several factors, including:

• All in-year service pressures reported as part of the monitor are resolved in full.
• The recovery grant of £4.829 million and the New Homes Bonus of £0.221 million applied in 2025/26 do not continue for 2026/27.
• The business rates related income, revenue support grant, social care grants, market sustainability grant and discharge fund are all assumed to be cash flat for 2026/27 and beyond.
• Contract and pay inflation at 3% for 2026/27 and then reducing to 2% for the final 2 years.
• Savings targets will be achieved by services to close the funding gap over the MTFS period. Any residual gap would require funding from reserves.
• The additional Adult Social Precept are passported to the service in full.
• Exceptional Financial Support (EFS) has not been incorporated nor any financing costs that might be required if it was applied.

The report also identified several budget risks, including the continued impact of high interest rates, demand for social care, and pressures in special educational needs and disabilities (SEND) and housing.

Budget Monitoring 2025-26 (Month 3)

The committee reviewed the budget monitoring report for Month 3 of 2025-26. The report showed a projected overspend of £31.412 million, with overspends in adult and children's social care, SEND, temporary accommodation, and property costs.

The report noted that the overspend assumes that all planned budget and management action savings will be delivered in full. The only exceptions are where a change control has been agreed by the Council Modernisation and Transformation Board (CMTB), to either reprofile the saving and / or provide an alternative mitigation.

The main areas of overspend were:

• Adult Social Care: A projected overspend of £4.682 million, mainly due to pressure from care placements and support packages.
• Children's Services: A projected overspend of £11.062 million, mainly due to children's care and placements spend, Section 17³ spend, and legal/staffing pressures.
• SEND: A projected overspend of £9.334 million, mainly due to the increase in demand through packages from children's and education services, the delay of transitioning to adult social care, and overspends on home to school transport and staffing.
• Temporary Accommodation: A projected overspend of £14.550 million, reflecting the on-going pressure from the increase in demand for temporary accommodation.
• Property: A projected overspend of £1.000 million, mainly due to a pressure in commercial rent income and facilities management costs.

The committee discussed the overspend in temporary accommodation, with members raising concerns about the number of residents being housed in hotels. Rob Manning, Strategic Director of Resources, responded that there had been no use of hotels as temporary accommodation by the council since November 2024, and urged committee members to provide details of any casework that indicated otherwise.

The committee also discussed the Dedicated Schools Grant (DSG), which is forecast to have an in-year deficit of £7.604 million, all within the High Needs Block. This would take the cumulative deficit to £16.476 million at the end of March 2026. The statutory override has recently been extended by two years to March 2028.

The Scrutiny Report

The committee discussed the forward plan and suggested items for future scrutiny, including:

• Reserves
• Council tax, business rates and debt collection
• Consultancy spend
• Procurement plan

The committee also reviewed the action tracker from the previous meeting.