The Cabinet has decided to approve various financial recommendations to address serious financial challenges and overspending projections for the 2025/26 fiscal year.

URL: https://modgov.hillingdon.gov.uk/ieDecisionDetails.aspx?ID=3367

Decision Maker:

Outcome: Recommendations Approved

Is Key Decision?: No

Is Callable In?: Yes

Purpose:

Content: RESOLVED:   That the Cabinet:   1.    Note the General Fund Overview as set out in Part A: Section 1 of the report; 2.    Note the 2024/25 outturn position as set out in Part A: Section 2 of the report; 3.    Note the budget monitoring position and treasury management update as at May 2026 (Month 2) as set out in Part A: Section 3 of the report, furthermore, noting the actions proposed by officers. 4.    Approve the financial recommendations as set out in Part B of the report below: a.    Approve the release of the General Contingency Budget of £0.5m to support the overall position of the Council. b.    Approves rephasing of £27,417k of General Fund capital programme budgets from 2024/25 into 2025/26 as set out in Appendix A1. c.    Approves rephasing of £14,922k of HRA capital programme budgets from 2024/25 into 2025/26 as set out in Appendix A2. d.    Approve the strategy to release capital receipts previously held to contribute to the Schools Budget deficit to fund transformation activity due to the Council’s Safety Valve Agreement being suspended by the Department for Education whilst a new agreement is negotiated. e.    Authorise the Director of Planning & Sustainable Growth to allocate and release s106 planning contributions totalling of £1.5m into the revenue position, predominantly to fund qualifying expenditure within homelessness support. f.     Agree that a budget virement is processed within the Schools Budget to set a budgeted deficit of £12.5m for 2025/26, which will increase the High Needs budget to better reflect predicted activity for the year. g.    Agree that a budget virement is processed to transfer Government Grant managed by service areas from the Corporate Funding budgets to Service Operating Budgets, with the grants to transfer being: a.    Public Health - £20,882k b.    Better Care Fund - £8,505k c.    Housing Benefit Administration Subsidy - £524k d.    Extended Producer Responsibility – £3,189k e.    Children's Social Care Prevention Grant - £1,318k f.     Local Voices & Community Reform - £164k g.    Extended Rights to Free Travel - £24k h.    Approves a budget virement of £1,356k to transfer savings that are required to be written out of service operating budgets back to the corporate centre to be funded in the 2026/27 MTFS, the breakdown for which is: a.    £202k of the £2.5m Zero Based Budgeting saving from 2024/25. b.    £36k of the £300k Future of Financial Systems Saving from 2024/25. c.    £700k of the Legal Services Review saving (100%) from 2024/25. d.    £150k of the Human Resources saving (100% from 2024/25. e.    £168k of the £1,559k Social Care Delivery Model saving in Children’s Social Care from 2025/26. i.     Note the proposed release of the 2025/26 General Contingency budget of £10.5m into the 2025/26 monitoring position, with the final decision on the General Contingency to be made in the Outturn 2025/26 Cabinet Report. j.     Approve revised Fees & Charges for the Music Service for 2025/26 as set out in Appendix B1. k.    Approved revised Fees & Charges for court costs for Council Tax and Business Rates from 1st October 2025. l.     Approve the Council to go out to consultation on in-year (2025/26) Fees & Charges changes in August, reporting back to Cabinet for decision. m.  Approve acceptance of gift funding in relation to a Planning Performance Agreement in accordance with the provisions of Section 93 of the Local Government Act 2003 for;                              i.        Barn Hotel, West End Road, Ruislip - £27,690 (+VAT)                             ii.        Ark Data Centre, Bulls Bridge, Hayes - £110,450 (+VAT)                           iii.        Heathrow Flight Path Car Park, Bath Road, Sipson - £33,060 (+VAT)                           iv.        Former Comag Works, Tavistock Road, West Drayton - £17,500 (+VAT)                             v.        Hayes Park West, Hayes - £ (61,900+VAT)                           vi.        Ariel Hotel, Bath Road - £24,310 (+VAT)                          vii.        Premier Inn, 3 Riverside Way, Uxbridge - £24,310 (+VAT)                        viii.        Block C, Former Nestle Factory, Nestles Avenue, Hayes - £35,000 (+VAT) n.    Note the building safety situation at the Union Park Estate, Brindley Place, Uxbridge and authorise the Director of Operational Assets to take the necessary decisions required to ensure the safety of over 250 private sector properties and to enable residents to remain in their homes while emergency works are progressed, in consultation with the Cabinet Member for Corporate Services & Property and briefing other Members as and when required.   Reasons for decisions   The Cabinet Member for Finance introduced the budget report, which covered the Council’s financial outturn for the year ending 31 March 2025 and the projected results for the 2025/26 fiscal year as of May 2025 (Month 2). The Cabinet Member apologised that the report was delivered late due to the complexity of ongoing issues within the finance function.   The Cabinet was informed that the report presented serious financial challenges but also outlined actions being taken to address them. It was noted that Hillingdon had long asserted it was materially underfunded by central government. This claim was now supported by the Fair Funding Review 2.0, which confirmed that the borough was the most underfunded local authority in London. It was noted that if the review’s proposals were implemented, Hillingdon’s funding could increase by up to 40%.   The Cabinet Member highlighted additional financial pressures, including a £5 million annual shortfall in funding for asylum seeker support, rising inflation and an unexpected increase in employer National Insurance contributions from April 2025. The General Fund outturn showed reserves of £6.7 million as of 31 March 2025, a £20.5 million adverse movement from the budgeted position. This was largely due to accounting adjustments identified by the Finance Modernisation Programme, some of which dated back over 12 years and not indicated for adjustment by external auditors. Only £1.3 million of the variance related to increased service operating costs.   The Cabinet Member advised that the 2025/26 budget monitoring projected a £16.4 million overspend, mainly due to rising demand for statutory services such as adult and children’s social care and homelessness. If realised, this would result in a £13.7 million deficit in General Fund reserves. The Council’s £38.8 million savings programme had been reviewed, with only £1.4 million written off, reflecting a strong track record in delivering savings.   The Cabinet Member stated that discussions with central Government were underway regarding Exceptional Financial Support (EFS), a mechanism to address historic underfunding. It was noted that at least seven other London boroughs were expected to receive EFS in the coming year.   Despite financial pressures, the Cabinet Member explained that Hillingdon’s service operating costs remained lower than comparable outer London boroughs, and its services continued to receive high ratings. The borough also maintained the second-lowest Council Tax and among the lowest fees and charges in outer London.   On the Dedicated Schools Grant (DSG), it was noted that this showed a projected in-year deficit of £12.5 million for 2025/26, bringing the cumulative deficit to £78.1 million. This reflected a £14.6 million reduction in annual operating costs. It was advised that the national underfunding of special educational needs had led the government to extend the statutory override on DSG deficits for two more years.   On the Housing Revenue Account (HRA), it was explained that this was projected to maintain reserves of £15 million through 2025/26, with only minor cost variances.   The Cabinet Member highlighted a number of recommendations in the report, including consultation on proposed in-year changes to fees and charges.   An additional recommendation was tabled via an addendum on an urgent fire safety matter at the Union Park Estate in Uxbridge. On this, the Cabinet Member for Corporate Services & Property explained that following a fire risk assessment commissioned by the estate’s managing agents, the Council had taken interim safety measures, including implementing a 24/7 fire waking watch service. Emergency works had already been carried out on the Council-owned block, and a notice had been issued to managing agents and owners asserting the Council’s authority to act under relevant legislation. The aim was to ensure residents’ safety while longer-term fire upgrades were pursued.   The Leader of the Council noted that the aforementioned fire safety situation exemplified unplanned expenditure, as the Council was acting to protect residents in properties it did not own. He also commented on the budget report, reiterating his concerns about asylum-related costs, historic underfunding, and the broken council tax system. The Leader welcomed the Fair Funding Review consultation and expressed hope that Hillingdon would receive the funding it deserved. He praised the Council’s proactive identification of financial issues and anticipated further debate when the matter would no doubt be discussed at full Council in September.   Cabinet agreed the recommendations in the report.   Alternative options considered and rejected   None.   Relevant Select Committee Corporate Resources & Infrastructure Expiry date for any scrutiny call-in / date decision can be implemented (if no call-in) Cabinet’s decisions 4. a) to h) and j) to n) on this matter can be called in by a majority of the select committee by 5pm, Friday 1 August 2025. If not called-in by then, Cabinet’s decisions can then be implemented. Officer(s) to action Andy Goodwin Directorate Finance Classification Public - The report and any background papers relating to this decision by the Cabinet are available to view on the Council's website or by visiting the Civic Centre, Uxbridge.  

Date of Decision: July 24, 2025