The intervention by Grant Thornton has seen the firm issue a number of recommendations that will be debated by councillors next week, reports James Cracknell

Enfield Council has been warned by its auditor to “take action” to reduce its debt and provide assurance over the state of its finances.

In an unusual move, Grant Thornton issued a series of recommendations to the council last week to demand that bosses take urgent steps to improve its finances.

Having recently assessed the council’s latest budgetary position, Grant Thornton decided to write to the civic centre under the Local Audit and Accountability Act 2014, which gives auditors the power to make recommendations to local authorities it deems to be at financial risk.

The auditor wrote: “We have concluded that it is appropriate for us to use our powers to make a written recommendation under Section 24 of the act due to the high level of debt and the risks associated with this, including an impairment loss in the council’s balance sheet, the low level of reserves, and their impact on the financial sustainability of the council.”

At the start of this year the council applied for £30million of ‘exceptional financial support‘ from The Treasury, which was granted ahead of the 2025/26 budget being agreed in February. Without this support, the civic centre likely would have faced effective bankruptcy.

The council’s debt, Grant Thornton states, is currently £1.286billion, but is forecast to rise to £1.5bn by the end of the current financial year. It remains one of the most indebted in the country.

The cost of servicing this debt – including both repayments and interest charges – is currently £31.4m, with this figure expected to grow to £35.4m in 2026/27 and £39.4m in 2027/28.

The council’s risk reserves, at £32m, have also fallen below the council’s own assessed minimum threshold of £43m.

The Meridian Water housing development at Edmonton is cited by the auditor as one of the biggest ongoing risks, while two council-owned companies, Energetik and Housing Gateway Ltd, have also come under scrutiny.

The council has already provided a series of responses on its financial position, pointing out that the council’s debt “as a proportion of core spending power” has reduced every year since 2021/22.

At a full council meeting next week, councillors will be asked to debate the civic centre’s financial situation and agree the recommendations – at the insistence of Grant Thornton itself.

Explaining the context and background to its intervention, the auditor wrote: “Grant Thornton UK LLP were appointed as the council’s auditors for a five-year period from 1st April 2023.

“At that time the council’s previous auditors BDO LLP had not signed an audit opinion since 2018/19. BDO LLP had also completed no value for money (VfM) work under the NAO’s new Code of Audit Practice at the time we were appointed and indeed did not complete that work for 2019/20 and subsequent years through to 2022/23 until the start of 2025.

“When we carried out the VfM work for 2023/24 we had no prior year audit reports to work from, and we had no audited accounts from the past four years to draw assurance. Our 2023/24 audit of the financial statements identified a number of issues with the quality of accounts and the records that supported them.

“We issued a backstop disclaimer at the end of August 2025 with additional commentary on the areas of the accounts we had not been able to audit during our work. In our 2023/24 VfM work, which we reported in October 2024, we identified a number of significant weaknesses and made some key recommendations.

“We also identified a number of issues, particularly around the fragility of the council’s debt position and the risks around recoupment of that debt which required future consideration. For our 2024/25 audit, we have better understood the financial risks to the council, and the need to take significant action.

“We have also recognised that although there has been turnover in senior officers, in the period from April 2024 onwards, including three different Section 151 [chief finance] officers, along with a change in the chief executive, which is always a risk factor, management do recognise the scale of the financial challenges and are seeking solutions in a proactive manner.

“The audit of the financial statements for 2024/25 is ongoing, but we have made sufficient progress to give us a better understanding than last year of the council’s underlying financial metrics. We are very clear that the financial challenges, including debt reduction, must be owned by all members as this is a corporate responsibility and we expect members to engage constructively with our recommendation.”

In a “management” response to the concerns raised, included in Grant Thornton’s recommendations report, the council stated: “Enfield accepted risk at a time of low interest rates and low inflation in order to invest in bringing forward housing at Meridian Water when the private sector alone could not carry the risk needed for delivery at the site.

“The council, supported by government investment, enabled development. This was further supported by the local infrastructure brought about by Energetik which is in line with the GLA heat zoning strategy. Housing Gateway Ltd works to reduce homelessness pressures and the revenue impact that this has on the council. It carries minimal risk given the asset cover and the profitability arising.

“All debt taken by the council was to facilitate the delivery of the council’s core priorities, none was with the aim of generating a financial return, but the strategy did succeed in leveraging additional public grant of more than £200m, plus private sector investment and new homes and job opportunities for residents.

“The council’s risk appetite was redefined in 2022/23. At that point, the forward-looking capital programme and capital financing costs were restructured in line with the new, lower, financial risk appetite at that time, arising from the changing economic climate.

“The council’s debt as a proportion of core spending power has been reduced every year since 2021/22 while other councils have significantly increased. £0.5bn of planned borrowing for the years 2021/22 to 2024/25 was removed.

“Capital financing costs have been reduced from 14.3% of net revenue budget to an outturn of 7.3% for 2024/25. This is within the affordability threshold set by full council (10%-12%).

“The statutory recommendation recognises the work that has happened and is already ongoing to continue to reduce the debt held by the council and the associated financial risk.”

Councillors will debate Grant Thornton’s recommendations at a full council meeting on Wednesday (12^th).

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