Harrow Council is grappling with a projected budget deficit of £9.6 million for the coming year, despite receiving a significant increase in government funding. The local authority has stated that the rising costs of adult social care and temporary housing are creating unsustainable financial pressures.
Fair Funding Increase Fails to Bridge the Gap
Under the government's new Fair Funding Allocation, Harrow is set to receive £100.6 million in 2026, with further increases to £108.3 million and £116.3 million planned for 2027 and 2028 respectively. This settlement, which includes multi-year grants, marks what the local Labour group calls a "radical overhaul" of council financing.
However, the council's Portfolio Holder for Finance, Cllr David Ashton, has made it clear that this boost, while welcome, is insufficient. He explained that the extra funding will be consumed by two major areas: an additional £14.2 million pressure for adult social care and a further £12.1 million for temporary accommodation in the 2026/27 financial year.
Soaring Costs Swallow Government Grant
Cllr Ashton described adult social care and temporary housing as a "bottomless pit" for council resources. He warned that the increased funding will only go "part of the way towards rises in costs but not all the way", leaving no money to reinvest in community services like libraries, youth clubs, or street cleaning.
Before the Fair Funding announcement, the council's finance team had forecast a much larger shortfall of around £32.5 million, even assuming a maximum council tax increase of 4.99%. The new grant reduces this gap by approximately £22.9 million, but the remaining £9.6m deficit presents a serious challenge.
A Legacy of Underfunding and Future Challenges
The political response highlights differing perspectives on the cause of the deficit. Harrow Labour's Shadow Finance lead, Cllr Natasha Proctor, attributed the situation to "14 years of chronic underfunding" from successive Conservative governments. She noted that Harrow Council has lost 97 per cent of its core government grant funding since 2011.
While acknowledging the funding does not completely close the budget gap, Cllr Proctor said it brings the shortfall to a "manageable level" and is a positive step. The final funding amounts are due to be confirmed in February 2026, and could still be subject to change.
The ongoing crisis underscores the intense pressure on local authorities across London, where demand for vital statutory services continues to outstrip available resources, despite recent changes to the national funding formula.
