Civic centre maintains it will balance next budget but has decided to take “prudent step” of asking government to help access extra £30m, reports James Cracknell

HM Treasury and (inset) Tim Leaver — HM Treasury and (inset) Enfield Council’s cabinet member for finance Tim Leaver

Enfield Council has announced it will be applying to the government for financial assistance as a “prudent step to protect ourselves”.

The civic centre is using the Ministry of Housing, Communities and Local Government’s exceptional financial support (EFS) mechanism, which councils can call on when they face significant difficulty.

It comes despite previous assurances to the Dispatch by council leader Ergin Erbil that the move would not be necessary this year – although he reiterated today (Thursday 23rd) that the council will still set a balanced budget for 2025/26.

Last year 19 local authorities, including two in London, used the EFS mechanism to access additional financial support, but this year it looks like many more councils will be relying on it, with Haringey and Barnet already having done so in recent weeks.

Accessing EFS does not mean the council will need to issue a Section 114 notice – declaring effective bankruptcy – although several councils that have used EFS since the mechanism was introduced five years ago have also had to issue a S114.

In Enfield’s specific case, the EFS request is for up to £30million, but this would come in the form of permission from government for the council to use capital receipts for revenue spending up to this amount, and only if necessary.

Like many local authorities in recent years, Labour-run Enfield has been dealing with an unprecedented financial crisis caused by a combination of soaring demand for statutory services such as social care and homelessness combined with government cuts.

The opposition Conservative group, however, has also highlighted Enfield’s debt – which at almost £1.3billion is among the highest in the country – as a significant factor.

Tim Leaver, the council’s deputy leader and cabinet member for finance, said: “Enfield Council is taking prudent steps to ensure we can protect ourselves from financial risks at a time of rising demand for the vital services we provide and increasing cost pressures.

“In common with many other councils, we have applied to the Ministry for Housing, Communities and Local government for £30m exceptional financial support to be made available if required.

“Enfield Council faces significant financial challenges due to years of government underfunding together with the impact of the national homelessness crisis and rocketing demand for social care support. The Institute for Fiscal Studies ranks Enfield as the seventh most underfunded authority in the country.

“Despite these challenges, we remain financially resilient and committed to setting a balanced budget by taking appropriate actions and making difficult decisions.”

In recent weeks the council’s Labour group has issued a number of statements welcoming recent financial support from the government and, in an interview with the Dispatch due to be published later this month, Cllr Erbil said the support since Labour returned to power in Westminster had been “very welcome”.

The Tories, however, have claimed that the baseline funding from government for Enfield this year represents a below-inflation rise.

The Dispatch has yet to see these figures, which will likely not be confirmed until the council publishes its draft budget next month.

Cllr Leaver continued: “We welcome the new government’s funding increase for next year. However, Enfield has suffered a sustained reduction in funding in real terms, which has led us to use reserves to balance previous budgets. Therefore, we have applied for exceptional financial support to safeguard against future financial risks.

“This support will allow us to use our capital receipts to fund this exceptional financial support without additional borrowing or debt costs. This responsible approach to budget planning will allow us to use our own funds to create a safety net to protect us from external risk.

“We continue to work hard to balance our budget by reducing costs and identifying savings.”

In response James Hockney, the opposition Conservative group’s spokesperson for finance, said: “It is clear to anyone the very serious financial crisis that Enfield’s Labour-run council is in and steps being desperately taken to avoid bankruptcy.

“The Conservative opposition has warned for years of the risks of the Labour administration pushing forward with becoming one of the top ten most indebted councils in the country. We are now sadly seeing the risks becoming all to clear, with council reserves having been decimated. The huge level of debt means substantial debt interest payments being taken from the frontline services revenue budget – £28m this year.”

“Which is why, for example, the Labour-run council is looking to save about £1m by closing half the borough’s libraries and cutting back on street cleaning.

“Matters are not helped by the new Labour government providing the council with a below-inflation settlement fund assessment allocation. Whereas last year we received a settlement from the Conservative government that was substantially above inflation – a real-terms increase.

“The Labour administration has trashed the council finances and sadly it will be residents that pay the cost through higher taxes and cuts to services.”

Cllr Erbil said: “Despite the significant financial challenges we face along with other councils due to years of government underfunding I am still confident that we will be able to balance our budget for 2025/26 by taking appropriate action.

“Having now worked through the impact of the provisional local government settlement as well as other aspects of the draft budget proposals it has become evident that it is prudent to apply for exceptional financial support (EFS) predominantly to enable our 2024/25 budget to be balanced without a significant call on our reserves.

“We are able to do this because we have undertaken a programme of asset disposals. By rightsizing the council’s assets we can use capital receipts which will fund the EFS. We will not necessarily draw down all or any approved support but we feel it is responsible to have that financial flexibility. This will ensure that we have ongoing financial sustainability.”

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