Barnet Council faces £113.5m deficit as report warns of financial risks

Barnet Council is on track to have the largest budget deficit of any local authority in London, with projections indicating a shortfall of nearly £113.5 million by the end of the 2027/28 financial year. This figure, based on BBC data, would make it the second-largest deficit in England, behind Hampshire County Council.

Damning External Review

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The council's financial position has been scrutinised in an 'external assurance review' commissioned by the Ministry of Housing, Communities and Local Government (MHCLG). This review was a condition of the 'exceptional financial support' (EFS) granted to Barnet. The report, compiled through desktop research and interviews in April, aimed to assess the council's finances and provide a plan for improvement. Of the 18 recommendations made, almost half received a risk rating of nine out of ten.

Key issues identified by the MHCLG include the absence of a credible savings plan and continued reliance on EFS, which weakens financial resilience. The report also cited inadequate reform in costly services such as adult social care, children's services, and temporary accommodation, where demand and market pressures are outpacing transformation efforts.

Exceptional Financial Support Borrowing

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For the 2026/27 financial year, Barnet Council borrowed £79.3 million through the EFS to address budget shortfalls. This follows a similar borrowing of £55.7 million in the 2025/26 financial year, though only £45.9 million of that amount was ultimately required. EFS allows councils to reclassify some day-to-day expenses as longer-term capital spending, which can then be funded through borrowing. Analysis for Haringey Council suggests that each £1 million borrowed via EFS could incur annual borrowing costs of approximately £62,000.

Council Response and Next Steps

Barry Rawlings, leader of Barnet Council's Labour minority administration, stated that the MHCLG report did not fully acknowledge ongoing work. He confirmed that the council accepts all 18 recommendations, with the primary objective being financial sustainability. Simon Radford, the council's cabinet member for financial sustainability, and senior officers are 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.