The next Brent Council administration will inherit a perilous financial situation

 

 Cllr Jumbo Chan at Brent Full Council on September 15th 2025

 Cllr Jumbo Chan, who has quietly and assiduously been doing a very competent job as vice chair of the Audit and Standards Advisory Committee, took just 2 and a half minutes at Full Council to inform his fellow councillors of the upcoming serious financial issues facing Brent Council. There was no reaction or questions from his colleagues. Cllr Chan is one of the recently deselected councillors.

His Committee meets again on Thursday and will consider the Interim Auditor's Annual Report LINK , a report on Council's work on actions following the Social Housing Regulator's finding of serious failings in Brent Housing Management LINK, and the Council's Risk Register.

It is clear that whoever forms the next adminstration after the May 2026 local elections will face a very rocky, if not perilous ride.

 

 The biggest impact and most likely risks include the number of people needing homeless accommodation, the High Needs SEND grant deficit, financial resilience (including the Housing Revenue Account following the repairs needed in the light of the Social Housing Regulator's findings) and a decline in Council reserves. 

The Auditor's report, despite the bland language, suggests that without further cuts and revenue raising the Council might have to  apply for additional emergency government funding (Exceptiona Financial Support) at high interest rates.

AUDITOR'S REPORT 

Here are some of the key points (my highlighting in bold):

Background 

The Council faced continued financial pressures in 2024-25, with a £15.5 million overspend driven largely by rising temporary accommodation costs. While reserves were used to balance the General Fund, the situation remains challenging. Saving plans delivered targeted £8 million in savings. A balanced budget of £431.4 million is set for 2025-26, including an additional £15 million for homelessness, which will cover current demand based upon 2024-25 numbers. However, homelessness pressures are expected to grow, adding further strain. The Dedicated Schools Grant (DSG) and Housing Revenue Account (HRA) also face financial pressure, with deficits and housing regulatory concerns highlighting the need for a robust, long-term financial recovery plan.

 

Key Recommendation 1

The Council must urgently take additional difficult decisions to ensure that a realistic budget can be set for next year and in the medium-term, so this can be delivered without the need to further draw on reserves nor Exceptional Financial Support (EFS) from central government 

 

 

The funding gap 

 

The difference between any council’s annual income and expenditure is the ‘funding gap’. The budget process aims to close this gap by identifying expenditure savings, additional income or using reserves to provide a balanced position. Any increase at the Council in demand or costs, higher than the growth forecast in the Medium Term Financial Strategy (MTFS), will require more savings or additional income to offset.

 

The MTFS, dated February 2025, anticipates a cumulative budget gap of £28 million by 31 March 2029, highlighting increasing financial pressures. Chart 1 sets out the savings and growth delivered to date and projected over a six- year period.

 

• Forecast growth for 2026-27 to 2028-29 in the MTFS is reduced to approximately £26 million per year, which is around 50% lower than the £53.3m million growth budgeted for in 2025-26.

• Forecast savings for 2026-27 to 2028-29 are only marginally higher than those required in 2024-25 and 2025-26.

 

This indicates considerable pressure in the current MTFS with limited scope to absorb unforeseen cost pressures.

 

Current spending levels across the Council are deemed unsustainable and pose a risk to the Council's financial sustainability. Without additional income, additional savings (which links to Key Recommendation 2), or service cuts, the Council is at risk of delivering overspends which cannot be supported by remaining reserves.

 

Impact: If the Council fails to manage demand for services and deliver against budgets the reserves levels will threaten its financial sustainability. Exceptional Financial Support (EFS) may be necessary for 2027-28, which would entail borrowing at a premium to cover revenue costs.

 

Key Recommendation 2: It is critical that savings through the Embrace Change Transformation Programme are quantified and integrated into the Medium-Term Financial Strategy (MTFS) providing a pipeline of sufficient recurrent savings and income generation schemes supported by robust business cases through collaboration and business transformation.

 

 

Areas for Improvement - disposal of property assets

 

Using the property strategy to identify assets that are not operational and not required for service delivery could provide the Council with a pipeline of potential capital receipts which could support the financing of the capital programme. This could reduce long-term borrowing and mitigate additional financing costs. Any plans for asset disposal should be built into the Medium-Term Financial Strategy with realistic timescales, to mitigate potential Exceptional Financial Support needs in 2027-28

 

Improvement Recommendation 1

 

Area for improvement: Using the property strategy to make best use of assets, including the identification of non-operational assets.

 

 

Area for improvement: Strengthening the medium-term financial strategy to reflect and mitigate risks from the Direct Schools grant (DSG) and Housing Revenue Accout) HRA balances.

 

The statutory override on Dedicated Schools Grant (DSG) deficits is extended to 2027-28, but the Council’s £13.6 million cumulative deficit remains unresolved, posing a material risk to the MTFS beyond the override period. Alongside pressures in the Housing Revenue Account (HRA), where compliance risks and rising costs threaten long-term sustainability, these issues require urgent financial planning and reserve management.

 

Evidence: Many councils are reporting significant deficits in their DSG accounts due to rising demand for SEND services, especially Education, Health, and Care Plans (EHCPs).

 

Management has actively managed the cumulative deficit DSG position from a high of £15.9 million in 2021-22 to £13.6 million at 31 March 2025. It is a strong achievement to have reduced the cumulative deficit and curtailed significant increases, with £1 million received from the Department for Education to mitigate in- year overspends, helping to maintain the deficit and prevent further growth. The Council's DSG Deficit Management Plan has been updated to cover up to and including 2027-28, in line with the extension to the statutory override, by which time the forecast DSG cumulative deficit could be £20.3 million mitigated or £31.3m unmitigated. Uncertainty remains around how the DSG deficit will be managed if the statutory override is not extended beyond 31 March 2028, and this is not built into the MTFS.

 

Meanwhile, the HRA shows a provisional £2.1 million surplus for 2024-25, but long-term sustainability is threatened by housing stock refurbishment costs and debt.

 

The HRA faces significant risk, indicated by the Council's self-referral to the Regulator of Social Housing which resulted in a “C3 – significant improvement needed” grading for failing to meet the Safety and Quality Standard in relation to accuracy and completion of fire safety data and housing repairs, highlighting compliance risks and potential cost increases.

Continuous monitoring and assessment are necessary as the Council develops a recovery plan which needs to be funded by the HRA reserve.

 

BRENT HOUSING MANAGEMENT 

The Brent Housing Revenue Account (HRA) had an underspend of £2m in financial year 2023-24 but will be under strain as a result of the works needed to satisfy the Social Housing Regulator and to ensure tenants and leaseholders safety, which is the main consideration.

 

The Action Plan on the issues raised by the Regulator was due early this summer and delayed until September the but still not published. The report before the Audit Committee threfore does not contained a costed programme to ensure compliance and we don't yet know its impact on repairs and rents.

 

Extracts from the report:  [My coments in square brackets]

 

The Health and Safety Specialist have been contracted to support ongoing improvement work, providing additional objective and independent oversight, as well building safety expertise.

 

Caldiston Ltd have carried out an independent forensic audit across all key compliance workstreams (including fire, gas, electrical, water, asbestos and decent homes requirements) which was completed in August 2025. The audit involved desktop reviews, staff interviews and validation of data from multiple systems in use by the service, including True Compliance, NEC, and LifeSpan. [Will audit and recommendations be made public?]

 

The audit aligned with officers' concerns, validating the referral to the regulator confirming that there were significant systemic issues, particularly in data management, governance, and policy implementation. The overall outcome of the audit was that the housing management service has inadequate assurance in relation to managing building safety and compliance.

 

Key recommendations from the audit include developing a comprehensivecompliance framework, resolving data integrity issues, closing overdue fire risk assessment actions, establishing central registers for smoke and CO detectors,and providing staff training on compliance processes. It is also recommended to implement dashboards for real-time KPI monitoring and align the Strategic Risk Register with actual risks.

 

The findings from the audit have highlighted and clarified several areas that the service had already identified as needing focus as well as some additional key learning. These findings will now feed into the development of a robust action plan for improvement. [Publication  when?] This action plan will also include root cause analysis (as recommended by The Regulator), to ensure permanent solutions are in place to prevent similar issues arising in the future and will form a key part of the agenda and monitoring for the relevant project board under the newly established Housing and Tenant Improvement Programme. 

 

Ongoing improvement work

 

Whilst the reflective audit work is vital for lesson learning and effectively mapping robust and long-term improvements to our management of building safety, it has been important to us as a service to ensure we are driving forward rapid improvements on the ground to strengthen oversight quickly and provide re-assurance for our residents
 

The Compliance Team have been onboarding additional contractors to expedite the completion of works as a consequence of Fire Risk Assessments, and as of 1 September it is confirmed that all outstanding high-risk fire actions in high-rise blocks have been satisfactorily addressed; either closed with evidence, completed and closed with evidence or work booked. [Figures for each category?]

The rebuild of True Compliance and the NEC asset register is underway [Expected completion date?], and additional governance has also been implemented around the management of data, in particular restricting property creation access which provides a more controlled approach to new properties being added to the system and feeding into compliance workstreams accurately.

 

The compliance team has been progressing with recruitment. A Compliance and Contract Manager, a dedicated electrical manager, a Quality and Delivery Manager and an interim Contract Officer all started in September. Two permanent Contract Officers are being shortlisted currently, all with a focus on compliance and safety.

 

Furthermore, the Housing & Tenant Satisfaction Improvement Board met for its initial meeting in September. [Please publish Minutes for transparency and accountability]

This Board, chaired by the Chief Executive, will oversee and drive initiatives aimed at improving the quality of housing services and increasing tenant satisfaction.

 

The Board will provide governance and oversight by monitoring the progress of improvement initiatives and ensuring compliance with housing standards. [Will results be pubished?]

 

Significant progress has been made in addressing the data issues highlighted in the audit report. Our priority has been to validate the ownership and the council’s compliance responsibilities of all properties on our Housing Database, NEC. This work is essential to build confidence in our data and provide a reliable foundation for reporting.

 

We are currently in the process of systematically reviewing each compliance stream, starting with Gas. This will confirm the properties that fall in or out of scope, and importantly, for what reason. Whilst the audit highlighted that confidence in the reporting number is low, we are using these figures as a baseline so that improvements can be clearly appreciated as our validation work progresses. This will result in the reported asset numbers changing as properties are validated and confirmed in work streams, and percentages fluctuating because of this.

 

This data correction work is not limited only to the properties we report on to the Regulator (i.e. council owned homes) but has been expanded to all residents in our properties e.g. leaseholders, i4B and FWH tenants etc. This ensures a consistent, council-wide approach that strengthens both safety andassurance moving forward.

 

A section of the report deals with financial considerations but not in detail:

 

Financial Considerations

 

 Like other local authorities, Brent is facing significant financial pressures and is continuously needing to look for efficiencies to address budget challenges. Some of the main challenges that could affect the long-term viability of the HRA Business Plan along with rent levels are major works and repairs.[How, increased rents and reduced works and repairs as in Kensington and Chelsea?]

 

As the Council adds more stock to its portfolio and complexities of new additional requirements to building standards are increasing, such as fire safety works and decarbonisation, the cost of major works are rising. At the moment, there is insufficient government subsidy available to address these changes.

 
 

The Asset Management Strategy and investment plans must be approached cautiously and allow for flexibility to scale back on schemes where required. Careful budget monitoring and financial planning are crucial. With a current 5.75% loan rate for the HRA, £1m in borrowing costs the HRA circa £28k per annum in interest costs.

 

The specialists that have been appointed to assist with the recovery of the compliance breaches, are currently undertaking an initial assessment of the situation with the intention of developing a recovery programme. [Cost of specialists?[

 

Upon completion of the initial assessment, a paper will be presented setting out the anticipated costs and financial implications. For comparative purposes, a registered provider with 21,000 homes that were in a similar situation, spent £2.3m on their recovery programme. [Brent Housing Management manages approximately 8,000 council homes, 4,000 leaseholds, and 31 Gypsy and Traveller pitches]

  

It should be noted that whilst operating under a regulatory notice, access to grant funding for housing developments may be reduced or ceased, until the council can evidence a position of compliance.

 

 

 

 

 

Cllr Tatler on the 'perfect storm' facing Brent Council finances

 Cllr Tatler made no bones about it at Brent Scrutiny last night: Brent Council is facing a 'perfect storm' regarding its finances:

 

 

As already reported by Wembley Matters the combination of increased homelessness (150 families a week seeking help from Brent Council), inflation, rising interest rates, rising private sector rents and reduced private sector rental properties as a result of landlords exiting the market; combined has led to a £13m overspend by the Council.

The Resources and Public Realm Scrutiny Committee delved deeper into the repercussions and possible mitigations last night.  

One focus was the 600 plus empty properties that could easily house the 500 families and single people (858 people in all) currently in expensive bed and breakfast accommodation.  The challenge was how to contact the owners so that the Council could lease the property.  Some councillors there were more than 600 empty properties and asked how the  Council collected the figures. A councillor asked if this coudl be checked against the most recent census. In response Cllr Tatler said that the Council could reactivate the campaign to ask residents to report empty properties.

Contact Empty Property Team

Opening hours: Monday to Friday from 9am to 5pm

Phone: 020 8937 2384 option 1 then option 4

Email: empty.property@brent.gov.uk

 

There are also 600 empty council properties on the South Kilburn estate in blocks that are due to be knocked down. However, officers said many are not habitable and were needed for decanting.

There was a need to look at buying new properties and building on existing council land.  There was a corporate exercise across the Council to ensure it is not missing out on potential subsidies but subsidies were also reducing:

Extract from Officers' Report

The loss of subsidy cost is forecast to rise to £8.6m in 2023/24 (from £3.7m in 2022/23) as rents increase but the Local Housing Allowance  remains unchanged at its current level. Benefits paid to those living in Temporary Accomodation  is limited to 90% of the 2011 LHA rates which, particularly since the pandemic, is significantly less than rents being charged by most private sector landlords today. A percentage of the Housing Benefits subsidy received from DWP when compared to the total amount paid to residents is forecast to reduce by 14% when compared to the average over the last three years (67% versus a 81% average). 

Councillors also asked about loss of Business Rates with commercial properties left empty. Could the Council charge double if left empty for more than 2 years as with empty homes? They were told that was not currently within the Council's powers. Cllr Tatler said that 90% of Brent businesses are SMEs (small and medium enterprises) who had been badly hit and thus no longer viable. Chair Cllr Conneely agreed with Cllr Malloy that she would rather be asking profit-making businesses to pay more than hard-pressed residents.

Cllr Malloy said that he knew of a commercial property in South Kilburn where the big property company owner had smashed all the toilets so they they could claim the property was unusable and therefore not pay business rates. This resulted in an interesting exchange with Brent Council leader Muhammed Butt:

 

 

 Questioned about the possible use of reserves to help meet the deficit the Head of Finance said that Brent's reserves around the mid-way point for London Councils. Much was earmarked for projects and it was prudent to have reserves available for unexpected events such as a pandemic. However, there was a case for a review of use of reserves that were not earmarked. Cllr Tatler pointed out that if reserves were spent they would have to be rebuilt in subsequent years. More information on the status of reserves will be included in the Budget report in February.

 

The Head of Finance noted the cross-party  'Eastbourne letter' to the government published on Wembley Matters LINK from 119 council leaders about temporary accommodation costs. It was signed byu Muhammed Butt.

 

Recommendations:

 

1. Council to lobby government on business rates.

2. Council to have a clearer plan on effective collection of business rates.

3. Council to investigate use of census data to help identify empty properties.

4. Council to work on ways of turning empty properties into usable properties.

Information requests:

Detailed information of subsidy loss.

Data on voids.

List of empty properties if data legislation allows.

 

Auditor: Brent better placed than most London councils to survive the financial challenges of the Covid-19 pandemic

The Audit Findings for the London Borough of Brent, to be considered by the Audit and Standards Committee on Tuesday September 8th are rather better than might be expected. LINK

The report by Grant Thornton  states:

 

.....To put this in further context, Brent Council could receive no RSG, council tax or business rates in 2020/21 and still balance the books using reserves. This is a much stronger position than virtually all other councils, however it must be noted that the reserves are earmarked to support strategic projects outlined in the Council’s capital programme and many of these reserves cannot be used to support revenue costs.

 

The report looks forward to 2020/21 and the impact of the Covid19 measures taken by the Council during lockdown and the impact on income.  Having had shaky reserves in the past the Council has been reluctant to eat into reserves but may have to as a consquence of a £29m funding gap, as well as reducing demand for services and 'efficiency'  cuts:

If there is a shortfall the Council has contingency plans to keep it on a sound financial footing. The Council will use the full range of options available, including (but not limited to) taking steps to reduce demand for services, implementing further efficiency savings, streamlining processes, and as a last resort re-diverting earmarked cash reserves as a one-off measure. The Council holds general reserves of £15.1m and £146m in earmarked reserves (excluding Community Infrastructure Levy funds and other ring-fenced reserves) which are held to meet specific identified purposes or future expenditure commitments, a large proportion of which are for financing the capital programme.

A review of the capital expenditure plan seems inevitable. Budget planning and consultation will take place soon.  One of the key issues will be what happens to Council Taxat a time when many residents will be strapped for cash as a result of unemployment resulting from the economic downturn.

 

EXTRACT FROM THE AUDITOR'S REPORT

2019/20 Financial Return

 

In a year where March saw the outbreak of the Covid-19 pandemic, the Council has performed well to achieve a breakeven position for its service area budgets. The Council responded to the pandemic situation quickly, making critical decisions in response to constantly moving government guidance. With only 2 weeks remaining of the 2019/20 financial year with the outbreak of the pandemic, impact on the financial outturn was minimised for 2019/20 but will be a larger impact on 2020/21.

 

The outturn for 2019/20 highlights the effective management action taken to address the pressures throughout the year. The £1.5m overspend in Children and Young Persons (CYP) (in part offset by contingency funds within CYP reserves) and £0.6m overspend in Community Well Being were offset by underspends within Regeneration and Environment.

 

The use of CYP earmarked reserves illustrates that the Council does have ongoing financial pressures which need to be addressed. However, this needs to be put in the context of income growth opportunities the Council’s reserves position. Brent has over £134.8m of usable reserves, excluding capital reserves, which can ultimately be deployed to address in-year shortfall. To put this in further context, Brent Council could receive no RSG, council tax or business rates in 2020/21 and still balance the books using reserves. This is a much stronger position than virtually all other councils, however it must be noted that the reserves are earmarked to support strategic projects outlined in the Council’s capital programme and many of these reserves cannot be used to support revenue costs. It is also worth noting that the Council is very clear about finding solutions in CYP going forwards.

 

The Council’s MTFS set in 2019/20 identified £11.4m savings required for 2020/21 and a best estimate budget gap of £20m for 2021/22-2022/23. In the November 2019 MTFS update a comprehensive review of technical budget assumptions took place, including a review of the 2020/21 savings plans and estimated savings of £4.28m to be delivered in 2021/22 and £1.77m to be delivered in 2022/23.

 

As a result of the pandemic it is expected that service departments will experience income and expenditure pressures in 2020/21. The magnitude of the pressures will depend on the severity and length of the pandemic. The Council has modelled the financial impact based on lockdown periods of 3 and 6 months and has a cost tracker to estimate and record the additional pressures relating to additional expenditure, loss of income, impact on savings and capital programmes, and treasury management issues. The Council estimates the 2019/20 impact to be £0.4m while for 2020/21, a 3-month lockdown period has an estimated lost income impact of £19.8m, with another £14.9m on top of that for a 6-month lockdown. The Council reports these figures to MHCLG fortnightly.

 

The net cost of Covid-19 to the Council is expected to be £47.6m (£42.7m of additional income and expenditure pressures and £4.9m of slippage in savings plans), which is far in excess of the £21.2m funding to be received from central government. The cost estimates are considerable, and the Council has been working to the assumption that costs will be fully reimbursed. Central government recently announced a new package of support which includes provision for some income losses to be reimbursed where losses are more than 5% of a council’s planned income from sales, fees and charges, with central government covering up to 75% of the remainder. Also, any deficits on council tax and business rates income will be allowed to be spread over 3 years rather than 1 year. Detailed workings of the scheme will be confirmed as central government drafts the statutory instrument that will effect the changes. This leaves the Council with an estimated gap of £26.4m before support for income losses is taken into account. If there is a shortfall the Council has contingency plans to keep it on a sound financial footing. The Council will use the full range of options available, including (but not limited to) taking steps to reduce demand for services, implementing further efficiency savings, streamlining processes, and as a last resort re-diverting earmarked cash reserves as a one-off measure. The Council holds general reserves of £15.1m and £146m in earmarked reserves (excluding Community Infrastructure Levy funds and other ring-fenced reserves) which are held to meet specific identified purposes or future expenditure commitments, a large proportion of which are for financing the capital programme.

 

The Council has modelled indicative forecasts of the council tax base and business rates income going forward. Modelling is challenging for the Council given that the Council receives c£50m (approx. 40% of net rates payable) of additional relief from central government to further discount the bills of businesses in retail, leisure and hospitality sectors, as well as small businesses:

• the Council received c£64m from central government to provide grants (between £10k-£25k) to support the above businesses; and

• all other business rate payers having difficulty in paying were offered payment deferrals in line with central government guidance.

Due to the above, the amount of NDR income collected to date compared to budget has changed significantly, and forecasting future collection is dependent on how long different business sectors take to recover, if at all. The Council has modelled business rates collection forecast for 2020/21 for the amounts collected and to be collected over a revised collection profile, against a reduced collectible debit, to support future business rates income projections. However, the amount of business rates the Council is allowed to retain is largely dependent on the future business rates regime and the amount of section 31 grant for certain business sectors. Also, the Council is part of the London business rates pool in 2020/21. London Councils will be modelling the potential impact of a deficit on the pool and individual boroughs and the results are expected later in the year. This exercise along with other intelligence and data gathering exercises on collection rates will be critical to better understand the potential impact on the 2020/21 budget and future budget assumptions for business rates income.

 

Over the past 2 years, the Council has been addressing historic overspends and undertook a comprehensive review of demographic pressures and other expenditure pressures, ensuring the Council could move to a more sustainable financial position. Following the Covid-19 outbreak the Council’s financial position has changed significantly. The impact of the loss of fees and charges, and emergency costs have had an immediate effect on all local authorities. In the longer term there is likely to be further squeeze on public spending, which could impact future funding settlement allocations.

 

The 2020/21 budget agreed in February 2020 included savings of £7.4m to deliver a balanced budget. Analysis shows that £0.3m of the planned savings are at risk of not being delivered at all, £2.5m of the planned savings have already been delivered, and £4.6m of the planned savings will not be delivered in 2020/21 (the Council will look to make these savings in 2021/22 instead). The 2020/21 budget also agreed business plans which included savings of £4.3m. Along with review and tracking of Covid-19 cost pressures, the savings position is being monitored daily and monthly monitoring reports and forecasts are reported to the Departmental Management Team. At this stage, all indications are that the 2021/22 savings (including the £4.6m of planned savings for 2019/20) will be achieved. Looking ahead, the savings forecasts will be reported quarterly and challenged and CMT and Cabinet, as well as the Resources and Public Realm Scrutiny Committee. As well as reporting progress of savings delivery the update reports will include mitigating actions or other interventions if there are delays in implementation or risk of delivery.

 

Proposed budget setting for 2021/22

 

Based on information available to date, the Council estimates that ongoing and recurring pressures will be in the region of £11m to £29m from 2021/22 across all service areas and council tax collection. At this stage, the estimates excludes future losses on business rates whilst further modelling is undertaken. Therefore, without additional funding or relives from central government the budget gap is likely to increase further. The Council’s estimates will be refined over the summer and are a major factor in the construction of the 2021/22 budget. Robust and credible plans will need to be developed and agreed in February 2021 to deliver a legally required balanced budget. At this stage, it is not clear when the Spending Review will be announced, or what the LG Finance Settlement for Brent in 2021/22 will be. The lack of clarity means that the Council will need to continue to plan with little or no funding certainty over the medium term. The Council expects to need to take difficult decisions about which services to prioritise and protect, and which to reduce in order to continue to deliver affordable and sustainable budgets.

 

To close a gap of this magnitude and in a relatively short space of time there are 3 main options:

 

• Further savings – options are limited given the current savings programme already includes a significant number of efficiencies and new income generation options are likely to be limited.

• Reduce growth assumptions – the current MTFS includes £13m of annual growth but there is a risk that reducing growth assumptions will store up pressures in future years.

• Scale back the capital programme – pausing or stopping specific capital schemes funded by borrowing would free up corporate revenue budgets set aside to provide capital financing.

 

A further consideration is if central government introduces new interventions specifically for long term Covid-19 related pressures, such as a multi-year minimum funding guarantee to compensate local authorities for income losses beyond their control. Another option may be to allow the capitalisation of losses, which would ultimately be funded by increased borrowing. The options will be further examined to ensure their consequences are properly understood and set out for members and the outcome of the review will be presented to Cabinet as part of the draft 2021/22 budget in October 2020.

 

The Council continues to maintain reserve levels much above those of its peers, but it is recognised that of the £398.4m total usable reserves and capital receipts reserve, £249.3m relates to reserves built up to help to finance the Council’s £1bn capital expenditure plans. 

 

Excluding the capital reserves, HRA and schools’ reserves leaves general fund reserves of £134.8m, which is close to the average level of reserves for London boroughs. However, the Council must carefully consider the use of its reserves to support revenue shortfalls as it is a non-recurrent source of funding, and use of reserves on a large-scale risks creating structural overspends if the Council’s finances do not recover quickly and income is reduced long term. 

 

From an audit point of view, the Council has managed its revenue reserves in a way that makes it better placed than most London councils to survive the challenges of the Covid-19 pandemic from a financial perspective. This prudent approach to reserves must be continued to address the risk of future pandemics, recessions and other issues or events that may impact on the Council’s financial sustainability.

 

 

Brent Council Tax rise of 4.99% in each of the next 2 years and no raid on reserves, recommended by Scrutiny Panel

Two main measures come up every year in the budget discussions in Brent when trying to mitigate the impact of lower government funding of local government.  One is the raising of Council Tax and the other is using some of the Council's reserves.

The Budget Scrutiny Panel has come out in favour of raising Council Tax and against using reserves to help fund services.

COUNCIL TAX

The government has give local authorties the power to bring forward the permitted Council Tax rise for social care so that the total amount is spent over the next two years (3% for 2 years then none in the third year) rather than 3 years. In addition there is the permitted, without a referendum, increase of 1.99% for other services.

The table above shows that this creates the need for almost £14m cuts in 2019-20. The next local elections are in 2018 so the incoming adminstration will have to administer those cuts.

The Panel argue:

Increasing Brent’s Council Tax by 4.99 per cent in the next couple of years could have a significant impact on the Council’s ability to continue to deliver these services as clearly demonstrated in the table above.

Of course, the Budget Scrutiny Panel was also acutely aware that it would be the ordinary residents of Brent who would have to pick up this tab.

The median income for residents of Brent is £33,482, significantly lower than both the outer London (£37,366) and inner London (£41,428) medians. We therefore have a special responsibility to ensure that the level of our Council Tax is not punitive.

Fortunately, it seems that Brent has so far met this obligation as our Council Tax is at the lower end of the spectrum in comparison to other London boroughs.

We recommend that over the long-term Brent keeps a close watch on its position in this table to ensure that our Council Tax level does not rise out of kilter with the rest of London.

However, in the short term we believe that a Council tax rise would be affordable for most of our local residents, particularly with Council Tax Support which ensures those on eligible benefits only pay 20 per cent of the tax.

To put into context:

·      A typical Band D property will currently be charged £1101.24 a year in 2016/17 (this 
is the Brent charge and excludes the GLA precept) 


A rise of 4.99 per cent would add £55.07 to this bill 


This would cost the tax pay a little over a pound per week 


This appears to presume no change in the Council Tax Support  Scheme.

RESERVES

The Panel argue:

The Council currently has unallocated reserves of around £12m. The Panel are comfortable with this level and do not propose taking money out of reserves to make up for losses in the Council’s grant.

The Council still faces many financial risks, from global factors in an uncertain political world, to local issues such as the increasing demand generated by the ageing population of Brent and the potential increase in demand for social care.

Should all of these risks to come to fruition the Council would only have reserves to cover the attendant costs for a couple of years. This is of course unlikely but reserves exist to cover the unlikely and we believe it would be imprudent to reduce them.

The Panel make a series of recommendations that will be discussed at Resources and Public Realm Sccutiny on Tuesday 10th January 7pm Civic Centre.  There is much more background discussion in the Full Report which can be found HERE

RECOMMENDATIONS

This report has presented the Budget Scrutiny Panel’s views on a wide range of topic attending to the budget. The report should be read as a whole with suggestions and ideas to be pulled out of almost every section. However, the key recommendations for reform which we would like to highlight are as follows:

1.     In future, any further proposals to reduce spending in Council budgets should be thoroughly evidence-based, with research into the likely impact on service users from any such change. The Council will need to be flexible and open-minded in looking at the most effective ways to deliver better services to Brent residents for the lowest possible cost. 


2.     The current demand-led review of Brent’s CPZ should be expanded with the aim of delivering a settlement for the whole of Brent which will be sustainable over the next twenty years to give further financial certainty to the authority. As part of this, the idea of day time visitor windows should be particularly investigated. 


3.     A report outlining all large-scale developments in the recent and upcoming years should be brought to the appropriate Scrutiny Committee in three months’ time. This would emphasise how mixed used each development was and allow scrutiny members to take a view on whether the balance is currently correct. 


4.     The Council should be forceful when dealing with TFL and seek to maximise business space in tube stations and use every development of a tube station as a potential to attract a new business to Brent. 


5.     A single “Business Attraction Manager” post, perhaps accompanied by a small team, should be set up in Brent. This would be a none-departmental role with the responsibility of attracting business to the borough and incentivised financially to achieve this without become a new financial burden to the Council. 


6.     Brent should seek to coordinate all local public sector bodies to develop a standard set of pre-qualification tests for procurement opportunities to make it easier for local firms to bid for work. 


7.     We believe that Cabinet should reconsider proceeding with proposal 1718BUD6 which would introduce charges (for) a more rapid collection of bulky waste, due to the reputational risk to Brent. Specifically, officers should model whether better signposting to other local services, including those within the authority, could deliver similar savings.