Barnet Council faces £113.5m budget shortfall

Barnet Council is facing a projected budget deficit of £113.5 million in the 2027/28 financial year, a figure identified as one of the largest anticipated shortfalls in the UK and the most significant in London. This situation has led to the council being designated as high risk in 13 out of 18 categories by a Cipfa review conducted for the Ministry of Housing, Communities and Local Government.

The Cipfa report, which was commissioned as part of the approval process for £79.6 million in Exceptional Financial Support (EFS) granted to Barnet for the current financial year, also noted a lack of a "credible and deliverable savings plan" and an over-reliance on "borrowing-backed EFS". The council had previously received £55.7 million in similar borrowing during the 2025/26 financial year.

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Rising Demand and Costs

The increase in homelessness and the associated costs of temporary accommodation are significant contributors to the council's financial pressures. Research from the charity Shelter indicated that Barnet has one of the highest homelessness rates in England, affecting one in 55 residents. Last year, the percentage of people seeking homelessness assistance rose by 83% since 2022, according to cabinet member for housing Ross Houston.

Greg Stride, a principal researcher at the Local Government Information Unit (LGIU), stated that Barnet's situation regarding temporary accommodation spend is a "relatively typical example of what’s happening across the country". He explained that the rising cost of living has exacerbated homelessness, simultaneously increasing the expense of housing individuals. This trend is expected to affect a significant proportion of councils, with LGIU estimating that 39% may need to seek EFS within the next five years.

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The 'Barnet Graph of Doom' and Social Care

The council's current financial challenges echo predictions made in 2011 with the release of the 'Barnet Graph of Doom'. This document, created by council officers, forecast a funding shortfall for all services except social care and children's services, assuming government support did not increase. The report highlighted that the demand and cost for adult social care, children's services, and temporary accommodation are outstripping delivery, leading to ongoing reliance on EFS and diminishing financial resilience.

Professor Catherine Needham from the University of Birmingham noted that social care, a responsibility largely left to local authorities since the 1948 National Assistance Act, has never had a "financially feasible approach" developed by the government. She explained that substantial cuts to local authority budgets have coincided with increasing demand for social care, driven by an ageing population and rising long-term health conditions. Needham added that current local authority budgets are insufficient to meet legal requirements for providing social care, a situation that places immense strain on services and forces difficult decisions.

The Cipfa report specifically described Barnet's social care position as "high-cost, average-outcomes", where the demand and price for adult social care, children's services, and temporary accommodation "outpace transformation delivery, resulting in ongoing reliance on EFS and weakening financial resilience."

Future Funding Challenges

While government initiatives like a multi-year financial settlement and the 'Fair Funding Review' aim to address these challenges, their impact is seen as limited. Greg Stride commented that the Fair Funding Review, while intended to redistribute funds, "didn’t affect the size of the pie" and that "we need more pie, essentially". Professor Needham echoed this sentiment, arguing that despite political promises, there has been a "real lack of delivery" and insufficient funding to meet demand.