The Council has already significantly reduced its spend through cuts to senior management by 20 per cent, freezing recruitment, reducing the number of agency workers and pausing any non-essential capital borrowing. Combined with efforts to manage demand on our services the council is forecasting an overspend of £17.6million this year, compared to the £60million overspend at the end of last year driven by the demand-crisis faced by local government in delivering essential, statutory services.
Work to be done
But as the report outlines there is still a lot to be done to get the council to a sustainable financial position. High costs continue to be felt in delivering high demand services such as emergency housing for homeless families and social care services for vulnerable adults and children. These pressures are being felt by councils across the country.
At the same meeting, the Cabinet will consider the report of an independent peer review from the Local Government Association which found that because of the strong political direction set by the Leader and Cabinet the council is “taking the right steps to tackle its financial challenges” and commends the tight grip the leadership has on controlling budget pressures and transforming services.
However, with severely limited reserves following 15 years of sustained underfunding from central government and continued pressures, particularly related to the costs of accommodation for homeless families the council is in discussions with the Ministry for Housing, Communities and Local Government about exceptional financial support. Many other local authorities are in a similar position.
This support allows councils to access additional borrowing. If secured for Lambeth it would give the council time to deliver the level of ambitious transformation required to get to a balanced budget and seek to protect as many of the services that residents rely on as we can.
Peer challenge
The report from the LGA peer challenge team, made up of experienced council officers and councillors from other local authorities recommended this support as vital to give the council time to deliver the scale of change that the financial situation requires.
Word from the Cabinet
Cllr Judith Cavanagh, Lambeth’s interim Cabinet Member for Finance, said: “Unprecedented demand for statutory services like temporary accommodation and social care services for adults and children following over a decade of sustained underfunding from central government has placed unsustainable pressure on the budgets of councils across the country and inner-city councils like Lambeth face those pressures particularly strongly.
“The damaged caused through a generation of central government underfunding will take years to repair, and councils will need further, sustained support to protect the services their residents depend upon.”
“Because the council is legally required to fund these services and legally required to set a balanced budget, that forces on us impossible choices that means savings having to be found across the council.
“We are proud that we have managed to maintain funding for vital services where possible that support vulnerable residents and our commitment is to make these decisions in the fairest way possible, protecting the services that support vulnerable people and that residents care about most.”
The reports to the council’s Cabinet set out that many difficult decisions will need to be considered to meet this scale of budget gap which is unprecedented at a time of rising costs for demand-led services.
This includes proposals worth more than £28million to contribute to meeting the budget gap over the next three years, made up of efficiencies, increased income and some service and staffing reductions to make the council more financially sustainable for the future. Further proposals will be brought forward in the coming months culminating in the budget setting and council tax report which will go to Full Council in March.
Budget engagement
The work on balancing the budget is being informed by over 5,000 residents who participated in the recent budget engagement survey about how the council could reduce spending in light of the financial challenge. The results of this engagement, and how the council is taking on board the feedback, will be considered during the budget setting process in early 2026.
To read the full reports visit moderngov.lambeth.gov.uk.
