While welcoming the news, council leader Cllr Barry Rawlings has cautioned the bailout is only a “temporary solution”.
Barnet is one of 30 local authorities in the UK and six in London that central government has agreed to help under its exceptional financial support (EFS) mechanism, which enables councils facing severe financial difficulties to avoid effective bankruptcy via a Section 114 notice.
EFS was created in 2020 by the previous Conservative government as a way to help struggling councils, but more authorities applied for support this year than ever before, pointing to wider problems with local government finance that Labour claims it will fix in time for 2026/27.
The one-off funding for Barnet will partly be met through borrowing and partly by using capital receipts, such as asset sales.
Labour’s Cllr Rawlings said the support provided “immediate relief” and enabled the council to set a balanced budget while working on a long-term plan to address the ongoing demands.
Barnet Council leader Barry Rawlings (Credit Barnet Labour)
He said the council has faced an “unprecedented crisis” in financing its services this year which was driven by a “perfect storm” of a “decade of funding cuts from central government”.
High interest rates, demand for complex and costly services, particularly in adults’ and children’s social care, as well as temporary accommodation, have all contributed, Cllr Rawlings said.
The opposition Conservative group, meanwhile, has accused the Labour administration in Barnet of failing to prepare for the “long-term trends” which Cllr Rawlings has blamed for the funding crisis.
Opposition leader Cllr Peter Zinkin highlighted the potential burden the borrowing placed on residents in the future as the council paid down the debt, such as cuts to frontline services and disposed assets.
Cllr Zinkin acknowledged “some of the problems” the council faced from the rising demand for social care and increasing homelessness rates and also said the government’s funding formula for the borough did not “fully reflect” the increasing costs authorities such as Barnet were facing.
However, he lay a portion of the blame at Labour, which took power in Barnet three years ago.
Cllr Zinkin said: “This Labour administration has failed to prepare for these long-term trends and has squandered £200,000 a day of the reserves which they were left when they took power in 2022 and bear heavy responsibility for the financial mess that Barnet finds itself in.”
Looking to the future, Cllr Rawlings added: “This is a temporary solution and will mean tough decisions for some time. We will be regularly engaging with residents to understand what is most important, so we can reshape services to focus on those things and deliver them even more cost-effectively.”
The council’s proposed budget for the next financial year, including the setting the rate of council tax, will be presented to full council for approval on Tuesday 4th March.
