North London Borough's Housing Crisis Pushes More Children Into Poverty
The London Borough of Harrow is experiencing a troubling surge in child poverty, with soaring housing costs identified as the primary driver behind this concerning trend. Recent analysis reveals that Harrow has witnessed the most significant increase in income deprivation affecting children across all London boroughs, highlighting how the area's escalating property expenses are placing unprecedented pressure on local families.
Government Funding Review Brings Mixed Results
Recent changes to how the Government allocates funding to local authorities have had what council officials describe as "a massive impact" on Harrow's financial position. The Fair Funding Review, confirmed in November last year, now incorporates housing costs when measuring average household income - a crucial adjustment that has exposed the severity of Harrow's affordability crisis.
This methodological shift means Harrow Council will receive increased funding through its Fair Funding Settlement, with additional support coming from the consolidation of sixteen separate grants into four primary funding streams:
- Public Health
- Children and Families
- Homelessness, Rough Sleeping, and Domestic Abuse
- Crisis and Resilience (formerly the Household Support Grant)
Financial Complexities Behind the Numbers
While the council's core spending power is projected to increase by £22.1 million next year compared to last year, and by £60.3 million over the next three years, financial officers caution that the situation remains complex. Sharon Daniels, Harrow Council's Strategic Director of Finance, noted that much of the additional £2.5 million from consolidated grants comes "with some strings" attached, particularly regarding children's services where new responsibilities are "very likely" to accompany the funding.
"At the moment we are looking at that £2.5m as additional funding but we are likely to have to spend an additional £2.5m, so it doesn't help us with our budget gap," Ms Daniels explained during a recent Special Meeting of the Finance Scrutiny Sub-Committee.
Budget Gaps and Council Tax Realities
Despite the funding increases, Harrow Council still faces significant financial challenges. A budget gap of £32.5 million over three years was presented at December's Cabinet meeting, though this has since been revised downward to approximately £11.1 million following the funding changes.
Portfolio Holder for Finance, Councillor David Ashton, described the revised situation as "not a mountain compared to what it was before, it's a hill", indicating that while challenges remain, they have become more manageable.
However, financial projections contain important caveats. A substantial portion of the increased core spending power derives from anticipated council tax rises, which could generate an additional £33.2 million over three years compared to £24.6 million from the Fair Funding Settlement. These calculations assume 100% collection rates, which Ms Daniels noted "is not logical" given that Harrow typically collects around 98% - still above national averages but creating a persistent shortfall.
Deprivation Indices Shift in Harrow's Favour
The inclusion of housing costs in deprivation calculations has significantly altered Harrow's position. The borough has moved from being the 27th least deprived out of 32 London boroughs in 2019 to 24th currently, reflecting how housing expenses have eroded household disposable income.
Ms Daniels acknowledged this shift, stating: "The change in the deprivation indices have given us quite a bit of benefit - not just us, a lot of London boroughs. [...] To not include housing as a measure when you're looking at money people have available to spend [when] it's probably the biggest expense people have [is wrong] so it's right they have included it."
Looking Forward with Cautious Optimism
Following the Fair Funding Review, Harrow Council expects to receive £100.6 million in 2026, rising to £108.3 million in 2027 and £116.3 million in 2028 according to government calculations. The revised three-year budget gaps now stand at £9.6 million for 2026/27 (down from £17.1 million), £2.1 million for 2027/28 (down from £8.2 million), and a surplus of £0.7 million for 2028/29 (previously a £7.3 million deficit).
Councillor Ashton suggested that if this methodology had been applied historically, Harrow would have received more funding in previous years, explaining: "That's the reason we are so short compared to other boroughs, so this is a move that should help us in future years as well."
While the funding settlements won't be finalised by the Government until late January or early February, the council is proceeding on the assumption they won't change significantly. To balance the budget, officials plan to draw approximately £3 million from reserves, which are reportedly "in pretty good condition". The final budget is scheduled for presentation at February's Cabinet meeting, marking a critical juncture in Harrow's efforts to address both its financial challenges and the underlying housing crisis driving child poverty.
