Barnet Council faces London's largest budget deficit
An external review identified 18 recommendations to address a projected £113.5m shortfall by 2028.
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Barnet Council is set to face the most significant budget deficit among all London local authorities by 2028, with projections indicating a shortfall of nearly £113.5 million. This figure places the council on course for the second-largest deficit in England, following Hampshire County Council.
External Review and Recommendations
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The projected deficit follows an external assurance review conducted by the Ministry of Housing, Communities and Local Government (MHCLG). This review was a condition of the council receiving exceptional financial support (EFS) from the government. The MHCLG report, compiled through desktop research and interviews in April, aimed to assess the council's financial standing and provide a strategy for improvement. It presented 18 recommendations, with nearly half carrying a risk rating of nine out of ten.
The review identified causes for concern including the absence of a credible savings plan and ongoing reliance on EFS. It also noted that demand and market pressures in key services such as adult social care, children's services, and temporary accommodation continue to exceed transformation efforts.
Financial Support and Borrowing
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To manage budget shortfalls, Barnet Council borrowed £79.3 million through EFS during the 2026/27 financial year. This was the second consecutive year the council resorted to this measure, having previously borrowed £55.7 million in 2025/26, though only £45.9 million of that allowance was ultimately required. EFS enables councils to reclassify some day-to-day expenses as longer-term capital spending, which can then be financed through borrowing.
Councillor Barry Rawlings, leader of the council's Labour minority administration, stated at a recent cabinet meeting that the MHCLG report did not fully reflect ongoing work. He confirmed that the council has accepted all 18 recommendations, emphasising that financial sustainability is the council's primary objective. Councillor Simon Radford, the cabinet member for financial sustainability, is scheduled to submit progress reports to the MHCLG by the end of September, utilising the latest available data.
The council's detailed 'Plan for Financial Sustainability' is due to be presented to members at next month's cabinet meeting. Opposition leader Peter Zinkin questioned the timing of the update's draft indications, deeming it "completely strange" given the submission deadline. Councillor Radford responded that using the most current data and following government requests was sensible.
Questions this report answers
+How large is Barnet Council's projected budget deficit?
Barnet Council is projected to have a budget deficit of nearly £113.5 million by the end of the 2027/28 financial year. This figure is expected to be the largest deficit of any local authority in London and the second largest in England.
+What caused the council's financial difficulties?
The council's financial challenges are attributed to the absence of a credible savings plan and ongoing reliance on exceptional financial support. Additionally, demand and market pressures in key services like adult social care and children's services are outstripping transformation efforts.
+What financial support has the council received?
Barnet Council borrowed £79.3 million through exceptional financial support (EFS) in the 2026/27 financial year to manage its budget shortfalls. This follows a previous borrowing of £55.7 million in the 2025/26 financial year.
+What happens next regarding the council's financial plan?
Barnet Council has accepted all 18 recommendations from the MHCLG report. A detailed 'Plan for Financial Sustainability' will be shared with members at a cabinet meeting next month, and progress reports are due to the MHCLG by the end of September.
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