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Brent Council warns finances ‘on a knife edge’ as it faces £13m overspend

Brent Council is facing a budget overspend of more than £13m, sparking fears of further cuts to public services. The North London council has warned finances are ‘on a knife edge’, particularly due to a rise in homelessness in the borough.

The £13.4m overspend was revealed in the council’s second quarter financial forecast, with the main cause being the housing services department, according to the report. It cites a 22 per cent increase in the number of homelessness applications compared to the same time last year.

Council leader, Cllr Muhammed Butt, told the Local Democracy Reporting Service (LDRS) that a decade of austerity has “pushed councils’ finances onto a knife edge”, as it was revealed local authorities in London face a combined £400m shortfall this year.

He said: “Brent Council has balanced demand for services with over £200m of cuts over the last 10 years – but we are now rapidly running out of options. In the last year, we saw more new homes built in Brent than anywhere else in the country. Yet this supply cannot keep pace with demand, with hundreds of new families facing homelessness each week.”

The forecast highlights £4.5m overspend in the cost of providing temporary accommodation, as well as an £8.6m loss of housing benefit subsidy from the Department for Work and Pensions (DWP) as a result of the type of accommodation being used to house the homeless.

An increase in demand and reduction in supply of temporary accommodation has seen costs soar as the council are having to book rooms in commercial hotels – at times outside of the borough.

The number of households in temporary accommodation in Brent has increased by 14 per cent since last year, whilst the number of families in Bed and Breakfast hotels has risen by 322 per cent.

The report suggests that pandemic, along with the associated lockdowns and ban on private evictions, “may have been a factor in this growth” but demand for homelessness services “continues to grow”. As of July 2023, the total number of homeless households living in Bed and Breakfast and Annexe accommodation has risen to 553, according to council figures.

Cllr Butt claims this is putting “unprecedented pressure” on the council’s budget meaning it is having to bring in “spending controls”. The council is set to take “urgent action” to get control of its finances, which it said have “worsened significantly”.

This includes implementing controls on new spending decisions, putting limits on new recruitment, and reducing the number of agency workers. These measures are set to remain in place until the end of the year to make sure the situation doesn’t “deteriorate further”.

Cllr Butt said: “These sensible, proactive and prudent measures will ensure vital services are safeguarded at the same time as protecting our longstanding healthy financial position.” The council is waiting for news of any further funding in the Chancellor’s autumn statement to be delivered in November.

Leader of Brent Liberal Democrats, Cllr Anton Georgiou, called the announcement “a shock” as there had been no prior warning given to the opposition. He said council claims that the overspend was impossible to predict are “hard to believe” given how large the sum is and more should have been done to mitigate additional financial pressures.

Cllr Georgiou told the LDRS: “In order to reduce costs associated with spending on emergency accommodation, Brent Council needs a much more ambitious strategy to deliver the genuinely affordable and social housing we need. This is the financially sustainable way of tackling homelessness in the Borough.”

He added: “To my mind this is another example of financial mismanagement by a Labour Council, that will now result in cuts to services for our residents.”