The Performance and Finance Scrutiny Sub-Committee met on 22 January 2026 to discuss the draft revenue budget for 2026-27 and the Medium-Term Financial Strategy (MTFS) to 2028-29, following the announcement of provisional three-year funding allocations. The meeting resulted in a revised budget gap for Harrow, reduced from £32.539 million to £11.093 million across the three years.

Draft Revenue Budget and Medium-Term Financial Strategy

The committee received an update on the provisional financial settlement for 2026-2027 to 2028-2029, which indicated an increase in total funding for local government nationally and specifically for London. This provisional settlement led to a significant reduction in Harrow's projected budget gap. The gap for 2026/27 was revised from £17.061 million to £9.634 million, for 2027/28 from £8.153 million to £2.141 million, and for 2028/29 from £7.325 million to a surplus of £682,000.

The committee was informed that the total funding for local government in London was based on an assumption of a 4.99% annual increase in Council Tax. It was noted that six London authorities – Windsor and Maidenhead, Westminster, Wandsworth, Hammersmith and Fulham, the City of London, and Kensington and Chelsea – had had their referendum limits removed, allowing them to increase council tax by more than this amount. A point of discussion was the government's assumption of 100% council tax collection, whereas Harrow's collection rate was 98%. Members acknowledged the improved funding position but expressed concern that the £11 million gap still required addressing and questioned if it might increase. They were advised that the budget was set for a three-year period and significant changes were not anticipated.

The committee also discussed the potential impact of increasing household numbers due to housing developments on council tax receipts, noting that the current budget had not factored in additional households. Further analysis was deemed necessary.

Concerns were raised regarding the financial pressures in areas such as temporary accommodation, children's services, and adult social care, and their long-term sustainability. The committee questioned whether the government would eventually fund these services, with the advice being that while this was a possibility, the current responsibility lay with local authorities.

The final financial settlement is expected in late January or early February 2026, with the final budget to be presented to Cabinet on 19 February 2026 and Full Council for approval on 26 February 2026. The committee also requested an update on deprivation data, specifically the index for Barriers to Housing and Services, which was promised for a future meeting.