Barnet Council is forecasting a significant overspend of £2.621 million for the first quarter of the 2026-27 financial year, primarily due to rising demand in key service areas and ongoing financial challenges. The council's Medium Term Financial Strategy (MTFS) indicates that Exceptional Financial Support (EFS) from the government will be required in 2027-28, with projected deficits escalating rapidly from £79.3 million in 2026-27 to £243.5 million by 2030-31. The council's assumption that EFS is temporary is not currently supported by a credible pathway to a balanced budget
.
The forecast overspend, detailed in the Our Plan for Barnet - Delivery and Outcomes Framework, Quarter 1 (Q1) 2026-27
report, is expected to be managed through contingency provisions. However, the council remains reliant on Exceptional Financial Support (EFS) from the government to balance its budget. Barnet Council received EFS of up to £55.7m in 2025/26 and has had approval in principle for up to £79.6m for 2026/27. Conditions attached to the EFS include the requirement for an external assurance review and ongoing transformation and improvement activity to support a return to financial sustainability.
Key areas contributing to the financial pressure include a continued rise in demand for temporary accommodation. The council is forecasting an increase to approximately 3,167 households housed in temporary accommodation by March 2027. While strong prevention activity and a slowing rate of change month on month
are noted, the report highlights that after these units have all been let, it is anticipated that the total TA and emergency block booked accommodation volumes will continue to increase.
High-cost placements and reliance on emergency provision are also drivers of high costs in adult social care and temporary accommodation.
Processing times for discretionary support applications have significantly lengthened, with the average determination time increasing from 36 days in Q4 2025-26 to 88 days in Q1 2026-27, well above the 30-day target. This backlog is being processed in date order, leading to additional burdens in assessing information and completing referral forms. Additional productivity improvement measures, including performance targets and process improvements, are being implemented to address this.
Income collection for council tax and business rates also remains below target trajectories. The percentage of Council Tax collected in-year was 27.45% in Q1 2026-27, down slightly from the previous year, and the percentage collected after four years was 96.83%, also down. The percentage of business rates collected in-year was 27.21%, up slightly but not enough to suggest the year-end target of 97.20% would be met. These shortfalls may pressure budgets, service quality, MTFS delivery, and reserves.
Barnet Council is facing several broader ongoing financial challenges. These include a widening structural deficit, projected to increase from £79.3 million in 2026-27 to £243.5 million by 2030-31. The council has low reserve levels, with General Fund reserves at approximately £15 million and a financial resilience reserve of £11.3 million, which are considerably less than the projected deficit in 2026-27. Increasing borrowing costs are also a concern due to reliance on EFS financing. The viability of the Housing Revenue Account (HRA) is deteriorating, with insufficient reserves to cover deficits beyond 2027-28, largely due to high borrowing levels. Furthermore, the absence of a credible Asset Management Plan and Disposal Strategy limits opportunities to generate capital receipts. Unresolved equal pay claims present potential financial and reputational exposure, and a low council tax base constrains income flexibility. Weaknesses in financial systems, technical accounting capability, and operational controls pose risks of inaccurate financial reporting and delayed identification of financial pressures. Uneven procurement capacity, pipeline management, and benefits tracking mean that service delivery models may not consistently translate into improved value for money or demand reduction.
Barnet Council's long-term strategies to reduce reliance on government financial support and achieve budget stability are centered around Our Plan for Barnet
and a commitment to financial sustainability.
Key elements include a Financial Sustainability Programme focused on debt management, commercial and income generation, and financial governance. Delivery is prioritised on Children's Financial Sustainability, the Adults MTFS, Temporary Accommodation Reduction, Cross-Council Transformation, and Digital and Data Transformation. The council acknowledges the need for transformation and service reform, particularly in high-cost demand-led services. A new Corporate Plan for 2026-2030 is in development, which will define the council's strategic direction and commitment to financial sustainability. The MHCLG External Assurance Review also recommended a review of the level of council tax as part of developing a realistic savings plan.
