Barnet Council borrows £79.3m amid financial sustainability concerns

Barnet Council borrowed £79.3 million through exceptional financial support (EFS) in the 2026/27 financial year to manage budget shortfalls, according to a report presented to the council's cabinet on Tuesday. This marks the second consecutive year the authority has relied on EFS, following a borrowing of £55.7 million in the 2025/26 financial year, though only £45.9 million of that was ultimately required.

The EFS borrowing was a condition of a government grant and allows councils to treat some day-to-day spending as longer-term capital spending. Analysis by KPMG for Haringey Council indicated that each £1 million of EFS borrowing could incur annual costs of approximately £62,000.

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External Review and Recommendations

The council's financial operations were the subject of an 'external assurance review' conducted by the Ministry of Housing, Communities and Local Government (MHCLG). This review, based on desktop research and interviews in April, aimed to assess the council's financial position and provide a roadmap for improvement. The review resulted in 18 recommendations, with nearly half carrying a 'risk rating' of nine out of ten.

Causes cited for these ratings included the absence of a credible savings plan and ongoing reliance on EFS, alongside weakening financial resilience. The report also highlighted inadequate reform of key services such as adult social care, children's services, and temporary accommodation, where demand and market pressures continue to outpace transformation efforts.

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Projected Deficit and Future Plans

Data published by the BBC indicates Barnet Council is on track to face the largest budget deficit of any London local authority by 2028. The projected shortfall is expected to reach approximately £113.5 million by the end of the 2027/28 financial year. This would make it the second-largest deficit of any council in England, with only Hampshire County Council anticipated to have a larger shortfall.

Barry Rawlings, leader of Barnet Council, stated at the cabinet meeting that the MHCLG report did not fully account for ongoing work. He affirmed that the council accepted all 18 recommendations, emphasising that reaching financial sustainability is the priority, as "everything else we want to do fails without that."

Simon Radford, the council's cabinet member for financial sustainability, is scheduled to submit progress reports to the MHCLG by the end of September, alongside senior officers. A detailed 'Plan for Financial Sustainability' is expected to be presented to members at a cabinet meeting next month.

Peter Zinkin, leader of the Conservative opposition, questioned the absence of draft progress indications at the cabinet meeting, given the submission deadline. Cllr Radford responded that it was important to use the latest possible data and act as requested by the government.