Series of new reports shed fresh light on the financial challenges being faced at Enfield Civic Centre, reports James Cracknell

Finance chiefs have issued fresh warnings over the state of Enfield Civic Centre’s coffers – saying “urgent” action is needed “to safeguard the financial sustainability of the council”.

In a series of reports, set to be discussed by the Labour administration’s cabinet next week, a number of stark warnings are made – outlining the difficulty the new leader of the council will face in balancing the books when they take office later this month.

The first report, detailing how the council has been performing so far during this financial year – including on the £16.6million-worth of cuts and income-raising proposals included in the 2024/25 budget – warns the council is now forecast to wrack up another £11.4m budget deficit.

This comes after last year’s budget overspend was revealed to be even higher than previously stated, at £39.4m, further depleting the council’s reserves.

Report author Annette Trigg, director of finance at Enfield Council, writes that, while the council has “sufficient reserves to fund the 2024/25 financial gap” the overspend forecast “if not mitigated” will need to be funded “from reserves or from capital receipts”.

However, the council’s risk reserve level has already fallen significantly over the past two years “to near the very minimum” needed. Capital receipts, meanwhile, can only be used to plug holes in the revenue budget with approval from the government – as part of a scheme introduced in 2016 to help councils cope with slashed funding from Whitehall since 2010.

Trigg’s report further warns: “The purpose of risk or smoothing reserves is to support budget management and provide resilience in the event of unforeseen risks, financial pressures and shocks materialising, however the level of reserves held by the council has reduced by circa £61m over the last two years.

“This is a concern that the council needs to urgently address in the medium-term financial plan and permanent recurring savings in service and operating costs, together with increases in income generation and taxation, need to be found to safeguard the financial sustainability of the council.”

The overspending seen so far this year – similar to problems faced last year – include £7.3m of extra costs on housing homeless residents in temporary accommodation, £6.1m of extra spending on looked-after children, and £8m lost from housing benefit subsidies.

“The key areas of overspend in the council are therefore significantly driven by higher levels of demographic/demand growth, contract inflation growth and wage growth than was anticipated when the budget was originally set,” writes Trigg.

In a second report, also authored by Annette Trigg, a review of the last financial year confirms that the overspend on the 2023/24 budget ended up amounting to £39.4m, some ten million higher than was previously forecast in January. This has been blamed on a reassessment of spending on schools and “an increasing material discrepancy between the housing benefit subsidy level and the amount that can be reclaimed from the government”.

Trigg states in the report that “there is an action plan in progress to use all the levers available to reduce this cost pressure”.

A third report, written by head of financial strategy Neil Goddard, looks ahead to the 2025/26 financial year and warns that a further £10m of cuts and revenue-raising proposals will be needed to balance the next budget, on top of the £243m already implemented since 2010.

However, with the change of government from Conservative to Labour this summer and Chancellor Rachel Reeves’ first budget due to be delivered in the autumn, Goddard writes that “at this stage the budget gap is dependent on a significant number of variables”.

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