The Quarter 3 Financial Report LINK going to Brent Cabinet on Monday repeats the Quarter 2 warning that the seriousness of the Council's financial position cannot be understated. The £13m overspend if sustained will require a transfer from unallocated reserves. Any overspending not dealt with will transfer to 2024-25 requiring more cuts in spending as the ability to use reserves will be reduced.
The scale of the financial challenge for 2023-24 and 24-25 us sucj that in addition to work currently underway to implement savings in 2023-24 and toidentify new savings proposals for 2024-25 and 2025-26, the Council will need to implement further measures to control expnditure in order to address the underlying issues that the Council's net expenditure is significantyl greater that available sources of in-year funding.
The main financial pressure continues to be on housing where there is an overspend of £13.2m:
The forecast overspend of £13.2m is made up of the following pressures:
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£4.2m overspend associated with the cost of providing temporary accommodation
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£8.9m attributable to a loss of housing benefit subsidy from the Department of Work and Pensions as a result of the type of accommodation being used to house those that are homeless
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£0.6m is a result of additional Council Tax liability on empty properties that are being considered for temporary accommodation use
- (£0.4m) is a saving attributable to spending controls, mainly staffing related
Homeless presentations at the Civic Centre have increased by 38% compared to this time last year, households in temporary accommodation in Brent are up by 13% and people in Bed and Breakast hotels has inreased to 639 (377 families and 262 single people):
This is an increase of 16% when compared to the previous quarter. If demand continues at the same rate, the service will received a total of 8,200 applications this financial year, an average of 158 applications every week, which is the highest it has ever seen.
Adding to the housing financial pressure is housing benefit subsidy loss for payments made. Where a family occupies more than one room in a hotel and the rooms are not connected only one room will be eligible for subsidy. The loss of subsidy is forecast to rise to £8.9m in 2023-24 (£3.7m in 2022-23).
As previously reported the Council is consulting on ending the South Kilburn Promise (Landlord Offer) for new temporary accommodation households and the use of void properties on the South Kilburn Estate for temporary accommodation. At present the Council incurs a £0.6m charge on South Kilburn void properties.
The South Kilburn regeneration itself is threatened by a viability crisis:
Viability is a key challenge for the remaining developments within the South Kilburn programme. The Single Delivery Partner approach is being explored to help provide certainty for the programme and provide economies of scale for the delivery partner.
South Kilburn is due to deliver 2,400 homes of which 50% are supposed to be 'affordable'. The reports says the programme is about halfway through with 10 sites delivered or on site and 7 sites remaining to be delivered.
Given what has transpired in the Wembley Housing Zone Cecil Avenue development (see Philip Grant's article) we might expect some tenure changes increasing the proportion of private housing.
If that becomes the case there will be a big question mark over whether South Kilburn council tenants promised a place in the new housing when their blocks were demolished, or are due to be demolished, will actually get one.
Elsewhere the Council has announced a decision for the Corporate Director for Comminities and Regeneration to make an offer to Londonnewcastle to acquire the Falcon pub site, previously seen as a key site forming a gateway to South Kilburn. Its acquisition along with the car park opposite led to the HS2 vent being controversially located within the estate next to a primary school.
There is just one sentence on the Bridge Park Regeneration which was featured recently on Wembley Matters LINK:
The Bridge Park Regeneration project is still in the early stages of developing options for delivery and is forecasting £0.8m of slippage.
That sounds rather like 'back to the drawing board'.
Other 'slippages' where expenditure goes into next financial year or beyond are in the Public Realm and total £7.7m:
The Public Realm is forecasting a variance for the overall programme of £7.7m, the majority of this is being slipped into future years (£7.5m). There are circa 135 Public Realm live Capital projects. Some of the bigger re- profiling includes Highways, where there is a £2.6m budget slippage. The key projects in Highways are Wembley High Street [sic] and Church End, which have experienced delays due to ongoing contractor disputes with FM Conway (£1.5m), the hostile vehicle mitigation has slipped by (£0.4m) as the works are reactive, and Highway Structures (£0.4m) where a new consultant is being appointed to take the programme forward. The parks programme is forecasting slippage of £1.6m which has been pushed out partly due to the pitch improvement project (£0.4m). Delivery is dependent on Thames Water's agreement to increase the drainage system and discussions are ongoing. Healthy Streets has had some scheme delays resulting in a £1.1m slippage, including (£0.5m) slippage on North End Road. Landscaping is forecasting a slippage of £0.7m, primarily due to procurement challenges. The new waste bin trial has been scheduled for 2024/25 resulting in £1.5m being reprofiled into FY24/25.
The dispute with FM Conway deserves further investigation.
There is more slippage in the Housing General Fund:
At Q3, the Housing General Fund is forecast to spend £30.6m below the current year budget. This position is due to slippage, i.e. expenditure originally targeted this financial year now moved to future periods. This quarter is reporting significant slippage at: Church End, £8.0; Clock Cottages, £1.7m; Edgware Road, £6.8m and Fulton Road, £14.1m. The underlying theme for this level of slippage is the viability challenges due to changing regulatory requirements (additional staircases and fire safety measures) and a generally worsening economic environment
In her foreword to the Financial Report Cllr Shama Tatler writes:
It is important to recognise that over a decade of austerity on Local Government has reduced the ability of councils to withstand issues like the increased pressures on Temporary Accommodation. The impact of the disastrous mini-budget last year on interest rates and inflation has significantly impacted the supply of housing and on delivering council services. Brent will continue to take decisions to ensure a sustainable budget can be delivered while safeguarding key services.
It is also worth noting that Brent will receive the second lowest Local Government Finance Settlement in London for 2024/25. Despite the significant challenges Brent faces, the Government has not allocated any support for homelessness pressures. Pressures on Local Government finances are going to continue to be difficult as a result of the decisions of this Government.
The full report lists all the measurea that have been or are being taken to tackle the financial shortfall and includes changes in services, attempts to reduce service costs via procurement measures, restructures and cuts in staffing. LINK
