Barnet Council faces £113.5m deficit by 2028

Barnet Council is predicted to hold the largest budget deficit of any local authority in London by 2028, with a projected shortfall of nearly £113.5 million by the end of the 2027/28 financial year. This figure places the council second only to Hampshire County Council nationally, which anticipates a deficit of approximately £180 million.

External Review Highlights Financial Risks

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Barnet Council borrows £79.3m amid financial sustainability concerns

An external review made 18 recommendations for the authority, which faces a projected £113.5m budget deficit.

A critical 'external assurance review' conducted by the Ministry of Housing, Communities and Local Government (MHCLG) has identified significant financial vulnerabilities. The review, a condition for the council receiving 'exceptional financial support' (EFS) from the government, made 18 recommendations. Nearly half of these recommendations were assigned a 'risk rating' of nine out of ten, indicating a high level of concern.

The MHCLG report cited the absence of a clear and achievable savings plan, alongside a continued reliance on EFS and diminishing financial resilience, as key causes for its ratings. The report also noted that inadequate reform of essential but costly services, including adult social care, children's services, and temporary accommodation, has exacerbated these issues. Demand and market pressures in these areas, the MHCLG concluded, continue to outpace the delivery of necessary transformations.

Reliance on Borrowing

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To address 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 such measures, following a £55.7 million EFS borrowing in 2025/26, although only £45.9 million of that allowance was ultimately required. EFS allows councils to reclassify certain day-to-day expenditures as longer-term capital spending, which can then be financed through borrowing. Analysis for a neighbouring council suggests that each £1 million borrowed via EFS could incur annual borrowing costs of approximately £62,000.

Council's Response and Next Steps

Barry Rawlings, leader of Barnet Council's Labour minority administration, stated that the MHCLG report did not fully acknowledge the work already in progress. He confirmed that the council accepts all 18 recommendations, emphasising that achieving financial sustainability is the primary objective. Simon Radford, the council's cabinet member for financial sustainability, along with senior officers, is scheduled to submit progress reports to the MHCLG by the end of September. The council's 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 timing of the decision to not present draft updates at the recent cabinet meeting, given the approaching submission deadline. Councillor Radford responded that using the latest available data and adhering to the government's requests were priorities.