Agenda item

This report provides an update on Brent’s overall financial position by examining the financial outturn position for 2025/26, the Quarter 1 financial forecast for 2026/27 and the medium-term financial outlook, which is part of the committee’s role in undertaking budget scrutiny throughout the year.

Councillor Grahl (Deputy Leader and Cabinet Member for Finance & Resources) was invited to introduce a report providing an update on Brent’s overall financial position by examining the financial outturn position for 2025/26, the Quarter 1 financial forecast for 2026/27 and the medium-term financial outlook.

In presenting the report, members noted that the update included three reports providing a comprehensive view of Brent's financial position by explaining where the Council had come from through the 2025/26 Outturn, where it currently stood through the Quarter 1 2026/27, and where it was heading through the MTFS to enable the assessment of financial performance, the challenge of assumptions, the monitoring of savings delivery, the understanding of emerging risks and the evaluation of the sustainability of the Council's medium-term financial strategy.

Having thanked Councillor Grahl for introducing the report, the Chair then moved on to invite questions and comments from the Committee in relation to the Budget Update report, with the following main comments and issues discussed:

• As an initial point, the Chair requested an update on the delivery of thematic savings across each Directorate, based on the commitment previously made to the Scrutiny Committee in February 2026. In response, Minesh Patel (Corporate Director Finance and Resources) began by advising that Finance and Resources had an overall savings target of just under £1.5m, comprising savings within commissioning, procurement, digital transformation, efficiencies and workforce initiatives. It was reported that the principal challenge related to digital savings, not due to an inability to deliver them, but because of capacity constraints impacting the pace of implementation. It was noted that alternative efficiencies and overachievement in other areas were being utilised to mitigate potential shortfalls. Whilst remaining confident that digital savings would ultimately be delivered, it was further noted that timing represented the key risk. The potential in-year shortfall was currently estimated at approximately £90,000 against the overall target, which was considered manageable within the Directorate.

Secondly, Rachel Crossley (Corporate Director Service Reform and Strategy) reported that Service Reform and Strategy had a savings target of approximately £2.316m. It was advised that savings proposals had initially fallen short by £705. Of the overall target, £500,000 had already been delivered and a further £1.2m remained on track for delivery. Approximately £440,000 of savings were currently rated amber, reflecting uncertainties associated with procurement exercises and digital transformation projects which still required market testing. It was further mentioned that one saving of £100,000 was currently rated red and related to fees and charging for individuals who funded their own care but chose to have their care arrangements managed by the Council. Work remained ongoing with the legal team regarding consultation requirements for the introduction of administration fees in this area. Whilst delivery remained possible, there was uncertainty regarding achievement of the full year saving.

Thirdly, Nigel Chapman (Corporate Director Children, Young People and Community Development) advised that the Directorate's savings requirement for the year was £1.58m. It was reported that £1.16m of savings had been identified and were considered achievable. These included workforce efficiencies, particularly through reductions in agency expenditure, alongside grant related savings and reductions in tail spend. It was advised that the most challenging areas related to the digital and resident experience programmes. Whilst savings would ultimately need to be achieved within the Directorate, specific and tangible savings proposals had not yet been identified in relation to those programmes and further work with colleagues remained necessary.

Fourthly, Gerry Ansell (Director Inclusive Regeneration and Climate Action) advised that Neighbourhood Regeneration had thematic savings totalling £2.5m, comprising efficiencies and income maximisation measures. It was explained that these included fee increases, capitalisation opportunities and maximising external funding sources. Whilst some risks existed within the programme, arrangements were in place to offset any areas of underperformance, and it was reported that the Directorate remained on track to deliver its savings target within the financial year.

Fifthly, Chris Whyte (Director Public Realm) advised that the principal focus within Public Realm related to generating improved returns from parking services. This included exploring the commercialisation of underutilised car parking spaces, increasing the use of AI and CCTV technologies to improve enforcement compliance, and reducing reliance on pay and display machines across the borough in order to eliminate ongoing maintenance and repair costs. It was reported that these programmes remained on track. However, one area of slippage related to proposals for a lane rental scheme. It was noted that implementation had been delayed because legislation required to devolve responsibility from the Department for Transport to TfL remained subject to legal processes. As a result, implementation was now anticipated from March or April 2027 rather than during the current financial year.

Finally, Thomas Cattermole (Corporate Director Residents and Housing Services) advised that the Directorate had identified savings totalling £2.6m, all of which were currently rated green and on track for delivery. However, a £560,000 saving associated with commissioning and procurement was noted with caution, as it relied on securing additional supply through 10 year plus 1 day leases in order to reduce the use of nightly paid temporary accommodation. It was highlighted that delivery remained dependent on conditions within the temporary accommodation market.

• The Committee then sought clarification regarding the Council's reserve position and financial resilience. In response, Rav Jassar (Deputy Director Corporate and Financial Planning) advised that reserves had reduced significantly in recent years as a consequence of rising service demand, inflationary pressures and ongoing funding challenges. Whilst annual budget growth had been included to address these pressures, expenditure within temporary accommodation, adult social care and children's social care had exceeded budgetary assumptions, resulting in overspends funded from reserves. It was advised that, following the improved funding settlement and budget setting process agreed in February 2026, the Council had commenced rebuilding reserves over the medium term in order to strengthen financial resilience and address future risks. Current available reserves were estimated at approximately £20m. It was noted that the Quarter 1 forecast projected an overspend of £9.5m and, if sustained throughout the year, this would require funding from available reserves. It was acknowledged that reserve levels remained low and represented an ongoing concern.

• The Chair subsequently queried whether the existence of the Dedicated Schools Grant (DSG) deficit effectively meant that reserves had already been exhausted. In response, Minesh Patel (Corporate Director Finance and Resources) clarified the distinction between the Council's General Fund reserve and other usable reserves. It was advised that the General Fund reserve of £20m was held separately and would not ordinarily be utilised to fund overspends, instead providing protection against unforeseen emergencies and significant financial shocks. It was explained that the reserves used to support budget management and overspends were distinct from the General Fund reserve. Turning to the DSG position, members were reminded that the Government had previously introduced accounting arrangements which prevented cumulative High Needs deficits from impacting directly on local authority balance sheets. Those arrangements remained in place until April 2028. It was explained that national reforms had subsequently been developed to address the issue, with the Government committing to fund 90% of accumulated deficits, leaving local authorities to fund the remaining 10%. It was reported that provision for the Council's share had already been incorporated within the 2026/27 budget planning process. Councillor Grahl (Deputy Leader and Cabinet Member for Finance & Resources) further added that there was no statutory requirement specifying a minimum level of reserves, although many local authorities sought to maintain reserves equivalent to approximately 5% of General Fund expenditure. For Brent, this equated to approximately £20m. Referring to the DSG position, Councillor Grahl welcomed the Government's commitment to address 90% of local authority deficits and confirmed that Brent had submitted an application accordingly. It was observed that Brent had acted responsibly over a number of years to reduce its deficit; however, concern was expressed that the proposed national approach could benefit authorities that had taken less action. It was also noted that no long-term mechanism had yet been identified to prevent similar deficits from accumulating again in the future.

• In response to members’ queries regarding the key decisions and strategies that had enabled Brent to remain in a comparatively strong financial position whilst many other local authorities had experienced significant financial difficulties, Minesh Patel (Corporate Director Finance and Resources) advised that a fundamental factor had been the Council's willingness to take difficult decisions over a sustained period. It was acknowledged that many of the decisions taken during the previous 10 years had not been easy and had often involved reductions in service provision alongside efficiency measures. A comparison was made between Brent's approach and that of some local authorities that had sought to avoid difficult decisions or had pursued higher risk income generation strategies, including significant commercial acquisitions. The importance of striking an appropriate balance between meeting statutory responsibilities and directing resources to priority areas whilst ensuring long-term financial stability was stressed.

• Clarification was sought by members regarding the Council's approach to homelessness prevention and the support available to individuals at risk of homelessness. In response, Thomas Cattermole (Corporate Director Residents and Housing Services) advised that the Council's immediate priority was reducing reliance on the most expensive forms of temporary accommodation, particularly nightly paid accommodation used during the initial 56-day statutory duty period. The Directorate was seeking to increase the supply of more cost-effective temporary accommodation whilst strengthening homelessness prevention and reduction activity. It was explained that the Council had commissioned a digital tool known as Xantura to assist in identifying individuals and households at risk of homelessness by drawing together information from multiple systems. It was advised that the homelessness prevention programme, led by Laurence Coaker (Director Housing Needs and Support), was focused on preventing homelessness before it occurred. It was noted that homelessness, the fear of homelessness and concerns regarding eviction represented some of the most common reasons for residents approaching Council hubs. Early intervention therefore remained critical in reducing future homelessness and associated costs. The Committee heard that staff operating from both the Turning Point Single Homelessness Service and New Horizons Families Homelessness Service worked with individuals and families at the earliest opportunity in order to prevent homelessness wherever possible. It was further explained that some residents approached the Council because they feared becoming homeless, despite not yet having received formal eviction notices, and that early engagement with landlords often enabled tenancies to be sustained. It was emphasised that preventing homelessness remained significantly preferable to responding once homelessness had occurred. It was further advised that work was also underway to review and develop the Council's Supported Housing Strategy.

• Following up, when asked how many officers were specifically employed in homelessness prevention roles, Thomas Cattermole (Corporate Director Residents and Housing Services) advised that whilst not having the exact figures available at the meeting dedicated teams operated within Single Homelessness, Families Homelessness and Tenancy Sustainment services with detailed figures to be provided following the meeting.

• Further queries were raised regarding whether homelessness prevention was sufficiently understood across the Council as a corporate issue, rather than solely a housing issue. In responding, Minesh Patel (Corporate Director Finance and Resources) advised that temporary accommodation and homelessness were recognised as whole Council issues. It was emphasised that homelessness had implications not only for housing services but also for education, children's social care, adult social care and wider public service partners. It was explained that the Council's transformation programmes aimed to ensure that any officer encountering an individual or household at risk of homelessness was able to identify and address issues at an early stage rather than waiting for the matter to escalate into a housing crisis. Thomas Cattermole (Corporate Director Residents and Housing Services) added that every Council service had a role to play in preventing homelessness and noted the significant impacts associated with homelessness for public health services, mental health services and the NHS. It was advised that new collaborative approaches with partners were already being developed within the Harlesden area.

• The Chair referred to examples of neighbouring authorities purchasing newly developed residential accommodation at discounted rates and questioned whether Brent was pursuing similar opportunities. In response, Minesh Patel (Corporate Director Finance and Resources) advised that discussions of this nature were undertaken regularly with other local authorities. However, it was noted with caution that some arrangements which initially appeared attractive did not always provide good value when considered over the longer term due to financing costs. It was emphasised that the Council sought to balance short-term opportunities with medium and long-term value for money considerations whilst continuing to explore such opportunities on a regular basis.

• Members recommended that consideration be given to developing a borough-wide register of vacant commercial premises together with clear targets to reduce long term vacancies through enterprise, community and creative uses. In addition, it was suggested that flexible or reduced rental arrangements be explored where this could help bring vacant units back into use. The Chair further highlighted the importance of ensuring robust asset disposal arrangements were in place and that Council assets were being marketed to the widest possible audience, including entrepreneurs and community organisations. In response, Minesh Patel (Corporate Director Finance and Resources) advised that both matters would be referred to the Director of Property and Assets and that a response would be provided following the meeting.

• Clarification was sought regarding downside stress testing within the Medium-Term Financial Strategy that had been undertaken for potential scenarios involving higher fuel costs, inflation, interest rates and provider costs. In response, Minesh Patel (Corporate Director Finance and Resources) advised that the Medium-Term Financial Strategy was inherently subject to changing circumstances and was therefore based upon a range of modelling assumptions. It was explained that the Council generally adopted a balanced position between best case and worst-case scenarios and that many existing contractual arrangements already contained mechanisms to manage inflationary risks. It was emphasised that assumptions were reviewed regularly and that the Medium-Term Financial Strategy was refreshed annually.

• Referring to the pattern of overspends often emerging within Adult Social Care later in the financial year, the Chair queried whether this reflected a recurring cycle within the service or was merely coincidental. In response, Rachel Crossley (Corporate Director Service Reform and Strategy) advised that a combination of factors contributed to this position with it explained that the Council had incorporated significantly more growth funding within the current budget. Whereas the previous year had included approximately £12m of growth alongside savings of just under £5m, the current year included approximately £20m of growth and savings of £2.3m. Members were advised that the main risk continued to relate to placement costs. It was also highlighted that increases in national insurance had taken place after budget assumptions had been set during the previous year and had therefore created additional pressures that had not been reflected in growth allocations.

• The Chair referred to a longstanding Scrutiny Committee request for a breakdown of revenue and expenditure associated with commissioned services and questioned whether this could be provided. In responding, Rachel Crossley (Corporate Director Service Reform and Strategy) acknowledged that procurement and contract management information had historically been an area of weakness for the Council and had been the subject of a procurement improvement programme. It was advised that improvements had since been made to contract registers and management information and any data available would be shared with the Committee, following the meeting.

• As a final query, members were keen to seek details regarding the preventative support models available to homeless individuals and those at risk of homelessness. In response, Rachel Crossley (Corporate Director Service Reform and Strategy) advised that work had been undertaken to develop services beyond traditional mental health provision, which often operated within a more eligibility driven framework under the Care Act. It was reported that a number of preventative approaches had been piloted within the Harlesden area, including greater involvement of voluntary sector organisations and community-based services. It was explained that these models had partly been developed in recognition of trust barriers that sometimes existed between residents and the Council. Confirmation was provided that further information could be shared with the Committee. Thomas Cattermole (Corporate Director Residents and Housing Services) further added that homelessness support teams were also operating within hospital settings and mental health wards to assist individuals with mental health needs in preparing for a successful return to the community and to reduce the risk of homelessness occurring following discharge.

In seeking to bring consideration of the item to a close, the Chair thanked officers and members for their contributions towards scrutiny of the Budget Update report. As a result of the outcome of the discussion, the following information requests identified were AGREED:

Information Requests

·       Provide a detailed update on delivery of the 2026/27 Budget savings programme. The response should include a tabulated breakdown of progress against both cross-council thematic savings and service-specific savings proposals, containing the following information:

Cross-council thematic savings

CC01 Commissioning & Procurement | CC02 Digital Programme | CC03 Efficiency | CC04 Workforce | CC05 Income Maximisation | CC06 Resident Experience & Channel Shift

·       For each thematic category listed above and each specific proposal within it:

o   The original saving target in £, the amount delivered so far, and an overall RAG rating for each proposal

·       A further breakdown for each contributing directorate to each proposal:

o   The saving committed in £, the amount delivered to date in £, and a RAG rating

Service-specific savings

NR01 Lane Rental Scheme | NR02 Asset Utilisation | PHRS01 Reduce Subsidy Loss | PHRS02 Homelessness Prevention | PHRS03 Housing Benefits Claim Reduction

·       For each service-specific proposal:

o   The original saving target in £, the amount delivered to date in £, and a RAG rating

·       Top-line summary of any slippage and mitigating actions

·       Provide the delivery plans for each cross-council thematic savings category, where available (CC01 Commissioning & Procurement | CC02 Digital Programme | CC03 Efficiency | CC04 Workforce | CC05 Income Maximisation | CC06 Resident Experience & Channel Shift). The information should include key milestones and timelines, quantified risks and mitigations, analysis of variances and their underlying causes, and any actions being taken to support delivery of the savings programme.

Please note, whilst the information requests agreed as an outcome of each item were based on discussions and issues identified during the meeting, the final requests have been refined following the meeting to improve clarity and readability, while remaining consistent with the Committee's discussions and intended outcomes.