Agenda item

The Committee received an update on the Council’s  financial position, noting that the Month?7 forecast remained broadly consistent with Month?6. Officers outlined the context for the 2026/27 budget and the Medium-Term Financial Strategy (MTFS) to 2028/29, highlighting significant demand pressures in adult social care, children’s services and homelessness, alongside cost increases exceeding inflation. The Council continued to experience financial pressures, with reserves fully utilised and funding levels remaining below those of comparable authorities. A 4.99% Council Tax increase was proposed, which would still leave the Borough among the lowest charging in Outer London. The 2026/27 budget included £22m of savings, rising to £30m by 2028/29, with £2.1m related to this Committee’s remit, while growth of nearly £70m was required to rebase budgets for unavoidable pressures. The capital programme had been substantially reduced to £229m over five years, with borrowing also significantly lowered. Officers confirmed that the Council could not balance the 2026/27 budget without Exceptional Financial Support (ESF) and was seeking £60m for the coming year, alongside further requests to restore reserves and address overspends, with future years also showing funding gaps that may require support. Risks identified included savings delivery, demand instability particularly in temporary accommodation and uncertainty around business rates following a major airport revaluation.

The Committee discussed the financial position in detail. Members referenced statements from London Councils regarding the severe pressures across London and the forecast multibillion?pound funding gap by 2027/28. Further information was requested on the operation of spending controls and officers reported strengthened processes, including senior sign?off for staffing, enhanced panels in adults’ and children’s services and a new system for temporary accommodation decisions. All non?contractual spend now required formal approval at multiple levels.

Members questioned the impact of rising demand particularly in children’s services, SEND transport, adult social care and homelessness on the Council’s ability to deliver statutory duties while making savings. Officers acknowledged the pressures and emphasised the need for stronger demand modelling and more granular weekly and monthly data to track caseloads and ensure residents were supported in the most appropriate and cost?effective settings. In response to a query on outsourcing the film office, officers confirmed this related to external management of filming activity, which generated income and formed part of wider procurement reviews of service delivery models.

Members also explored trends in service delivery and the role of digital investment. Officers highlighted examples where modelling informed decisions, such as past shifts between outsourcing and in house provision. Ongoing digital improvements, including a new website, automated systems to reduce manual processing and enhanced business intelligence tools for forecasting and monitoring spend were reported.

The Committee asked about recruitment controls and was assured that the new process for approving posts was now well?established and operating efficiently. In terms of savings within property services and resident services, officers confirmed that directorates had reviewed structures and working practices to identify achievable proposals while maintaining service delivery. Members raised concerns about energy costs and officers outlined ongoing work to reduce consumption, including the Civic Centre decarbonisation programme, insulation upgrades and participation in a national energy procurement group to secure competitive prices. The Committee also discussed the impact of improved procurement practices more widely, which officers reported had contributed positively to achieving value for money.

The Committee looked at EFS and how the related borrowing costs had been included. Officers explained that these costs were expected to reach around £10 million a year by the end of the three?year period. Members raised concerns about the Council’s past difficulty in delivering savings and officers described the challenge sessions held to test proposals and the requirement for detailed delivery plans, supported by corporate oversight. Officers also noted that Hillingdon had historically had lower borrowing than many other authorities because it had avoided speculative investments, although the use of EFS would now increase borrowing levels.

Members asked about the phased fair funding settlement and business rates assumptions and It was explained that Government forecasts included assumptions about Council Tax but did not take into account the expected Heathrow appeal. Officers then outlined capital plans, noting that spending had been reduced to keep costs affordable, with investment focused on statutory duties, regeneration and major HRA projects, and that long?term affordability continued to be monitored. Members also queried the deliverability of savings such as garage voids and green waste subscriptions and it was explained that income had been spread across future years, noting that lessons from previous years had informed the approach. Officers reported around 75 responses in the first week of the public consultation and confirmed that the ranking question followed best practice.

In relation to staff training and financial management, new investment in learning and development, improved financial training, stronger procurement awareness and better use of data systems was highlighted to the Committee. Officers also pointed to strengthened governance, including savings dashboards and spend controls over £500 and said these measures, together with rebased budgets and increased oversight, placed the Council in a stronger position to deliver savings and maintain financial stability.

The Committee considered the draft response to Cabinet. An amendment was proposed to retain the first two paragraphs and final section but to add wording commending the current government for the additional funding received this year, noting the increased allocation of £126.7 million over the next three years and its commitment to ensuring that Hillingdon residents continued to access much?needed services. Members agreed it was important to recognise that the uplift in funding was necessary and had now been provided. The Committee also discussed whether to retain references to Heathrow Airport in the response. Some Members argued that Heathrow should remain included because it disproportionately affected Hillingdon’s finances more than other boroughs and had been highlighted by officers as a significant forecasting risk. The draft response, incorporating the proposed amendments, was put to a vote and received three votes in favour and four against, including the Chair’s casting vote. The Committee then voted on whether to submit the original response to Cabinet as their view on the finance budget. Four members voted in favour and two voted against.

The Committee therefore agreed the following comments:

‘The Committee is grateful for all the hard work undertaken by both Councillors Goddard and more recently Lavery in their respective Cabinet roles.  Together with all the Finance Officers of the Council in whatever capacity.

We recognise the exceptionally challenging climate that has pertained over the last several years which has impacted not only harsh condition in which local authorities have to operate, but also the related but vital economic landscape in which partner businesses and services inhabit. 

All local authorities report significant challenges in operating in these conditions, some with far more issues than other.  We in Hillingdon face particular problems associated with Heathrow which historically and currently has never been financially addressed.  This includes the pressures from asylum seekers, many of whom are unaccompanied children who generate immediate additional unrecoverable costs to our residents.

It is of note that London Councils are forecasting a multi-billion deficit in London wide Council funding for at least 50% of Boroughs in the Capital by the end of 2027 - this is unsustainable.

The conditions under which Hillingdon is operating, with our additional pressures, are very significant.  However as evidenced in the performance report, the Council has continued to provide good quality services at amongst the cheapest across London.

We welcome all the efforts and proposals to ensure that the correct savings are made while keeping to the desire to maintain good services at reasonable costs to residents.’

RESOLVED:

That the Committee:

1.         Noted the draft revenue budget and Medium-Term Financial Strategy proposals for 2026/27 to 2030/31 relating to services within the Committee’s remit.

2.         Considered and commented on the financial assumptions, savings proposals, growth pressures, service impacts and delivery risks within those proposals.

3.         Agreed the above summary to be submitted to Cabinet for consideration as part of the final budget proposals to be presented to Council in February 2026.