Harrow Council has reported a £1.5 million surplus for the 2024-2025 financial year, despite concerns raised during a Governance, Audit, Risk Management and Standards Committee (GARMS) meeting.

The surplus was announced during a review of the Statement of Accounts 2024-2025 by the GARMS Committee on Tuesday, 22 July 2025. Sharon Daniels, Strategic Director of Finance, noted the surplus would be added to the earmarked reserve.

However, the meeting also highlighted several areas of concern, including ongoing audit qualifications and potential risks to the council's financial stability. The Draft Annual Governance Statement 2024-2025 identified areas needing improvement, including adult and children's social care, the school's PFI contract, and significant cost pressures.

Suresh Patel, from Mazars, the external auditor, indicated that due to a disclaimed audit opinion in the previous year related to statutory backstop arrangements introduced by the government to address audit backlogs, the audit opinion would be qualified, in line with National Audit Office guidance. He explained the process for moving from a disclaimed audit opinion to an unqualified opinion would take a couple of years.

Suresh Patel from Mazars, the external auditor
Headshot of Suresh Patel, Audit Partner from Mazars, who spoke at the Governance, Audit, Risk Management and Standards Committee meeting.
Suresh Patel from Mazars, the external auditor

Other key points from the meeting included:

  • A downward revaluation of council dwellings by £72 million.
  • A further downward valuation of investment properties by £9 million, mainly due to a disposal.
  • An increase in short-term debtors attributed to the timing of invoices for the Brand Council. Invoices for the Brand Council were raised at the year-end in March 2025, whereas in the previous year, invoices were raised earlier and payments were received promptly. This timing difference caused an increase in short-term debtors.
  • Significant cost pressures impacting adult and children's social care. For adult social care, a £5.5 million overspend was noted, with demand from children and young adults with disabilities being a key driver. Councillor Kumaran noted a significant increase in costs for children's services. Measures being taken to mitigate these pressures include looking at commissioning arrangements to ensure best value for money, working with the NHS around discharges, and a series of budget challenge sessions to balance the MTFS.

Councillor Kumaran sought clarification on the difference between the £1.5 million surplus and the £14 million increase in usable reserves.

The committee also reviewed the Corporate Risk Register Update Q4 2024-2025, which highlighted four red risks: increasing homelessness, inability to deliver the MTFS, failure to meet adult social care demand, and failure to fulfil health and safety duties. Measures in place to manage health and safety, achieving the MTFS on adult social care, and homelessness were discussed. To address these risks:

  • Adult Social Care: The team is looking at commissioning arrangements to ensure best value for money and working with the NHS on discharges.
  • Homelessness: The council is trying to manage the situation efficiently and effectively.

The Draft Annual Governance Statement 2024-2025 identified the school's PFI contract as an area for improvement, resulting in an extensive management action plan and a follow-up audit planned for quarter two or three. A report regarding the PFI contract was presented to the committee.

The GARMS Committee agreed to the recommendations set out in the reports, with ongoing monitoring and action plans in place to address the identified risks and areas for improvement.