Council leadership ‘confident’ of balancing budget despite opposition bankruptcy fears

Rising debt repayments, inflation and soaring housing costs have led to a £39m budget hole at Enfield Civic Centre that needs to be filled in six months, reports Simon Allin, Local Democracy Reporter

Enfield Civic Centre in the snow
Enfield Council is facing a long winter of spending cuts to balance its spring budget

The Labour administration at Enfield Council insists it is “confident” it can balance its budget despite fears of bankruptcy being raised by opposition Conservatives.

The council is now one of the most indebted local authorities in the country but the leadership at Enfield Civic Centre has moved to downplay speculation it might have to issue a Section 114 notice – effectively declaring bankruptcy – after several other councils with large debts either issued such notices or warned they were close to doing so.

A spokesperson for Enfield Council this week said there was “no evidence” to suggest it was close to issuing a Section 114, after the issue was raised by the leader of the Conservative group at a meeting last week.

This summer, official figures from the Department for Levelling Up, Housing and Communities revealed the council’s £1.12billion debt pile was the tenth highest of England’s local authorities.

Councils that have recently issued Section 114 notices – which bar them from making new spending commitments – include Birmingham, Croydon, Thurrock and Woking. Last month Havering in East London also announced it was six to twelve months away from having to do so

Faced with a projected £39million budget gap for the 2024/25 financial year, caused largely by higher inflation, borrowing costs and soaring demand for temporary housing, Enfield Council recently proposed several new cuts in a bid to balance its books.

Among the proposals is a significant reduction to a scheme set up to help the most vulnerable residents with their council tax payments, which Labour had pledged to retain at its current level in its election manifesto last year.

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During last week’s full council meeting, Conservative opposition leader Alessandro Georgiou warned a Section 114 notice “will come at some point”, adding: “We can play the blame game or we can take the decisions today to mitigate that and to ensure that our residents in the future will not be carrying a significant council tax burden.”

Responding to the speculation, a council spokesperson said: “Like all local authorities, Enfield Council is having to make difficult decisions due to budget challenges caused by inflation and government cuts, but we are confident we will balance our budget.

“There is no evidence to suggest we are close to a S114 situation that other councils have experienced – a recent LGA [Local Government Association] peer review found our budget was in a robust position and we have always been prudent.

“We will continue to invest in Enfield and our services to make a cleaner, greener and safer borough.”

Cllr Georgiou stood by his comments, however. Citing the council’s high debt, “extreme” levels of borrowing at Meridian Water and “failures” at council-owned company Energetik, he said a Section 114 notice was “inevitable”.

He added: “As far as I am concerned, I see no way out for the council. There is a £39m spending gap, and ultimately what that means is they are cutting the council tax support grant.

“It is around 30,000 people in Enfield – these are the poorest people in Enfield – who thanks to this Labour council will have the grant cut and be in a worse situation during the cost-of-living crisis, which is entirely inappropriate.”

Cllr Georgiou’s Conservative colleague James Hockney, who is shadow cabinet member for finance, added: “The path that the Enfield Labour council chose puts them at significant risk of bankruptcy.

“Enfield Conservatives repeatedly warned Enfield Labour on the risks of high borrowing – for years. They ignored these risks and now we are the tenth most-indebted council in England out of over 300 councils, with a number of other top ten councils already going bankrupt – issuing S114 notices.

“Already their reckless approach is meaning huge cuts to frontline services to pay the growing debt interest bubble. Already out of a £286m budget, £32m is spent on debt. This will continue to increase to £46m in three years’ time, which is clearly not sustainable.

“Enfield Council has two choices; one, to carry on as they are with their reckless borrowing and putting them on a course for bankruptcy, or two, making ongoing devastating cuts to services and selling off council assets.

“I do not envy the decisions they will have to make – but it is of their own making.”

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