The details are in Lambeth’s Medium Term Financial Strategy (MTFS) report set to be discussed at the council’s Cabinet meeting on Monday, 18 July. It outlines the challenges which rising costs will pose as the council plans how to balance its budget amidst increasing demands for vital services.
Rising costs
The rising pressure on the council budget comes at a time when the most vulnerable in society are being hit hardest by the cost-of-living crisis and demand for services, including social care and temporary accommodation for homeless families, is on the increase.
Families caught in the grip of the cost-of-living crisis are currently being offered extra financial help under a £4.3million programme of support drawn up by the council, with 92,040 households having already received their energy rebate.
Throughout the pandemic, Lambeth Council acted to support families with help with food and household bills and is continuing to work with local charities like food banks to make sure help is there for those who need it. Earlier this year Council Tax Support was increased by £3million, reducing the bills of almost 7,000 vulnerable households, with most seeing their bills reduced to nil.
But funding pressure mean the council’s ongoing ability to provide essential support is uncertain in the years ahead.
Lambeth Cabinet call
Cllr David Amos, Lambeth’s Cabinet Member for Finance and Cost of Living, has called for the Government to provide extra support to help councils cope with inflation after the Consumer Price Index (CPI) rose by 9.1 per cent in the 12 months to May 2022. He has urged the Government to recognise the additional demands caused by inflation when calculating how much funding councils receive in future.
The council’s Medium Term Financial Strategy which sets out a programme for managing the council’s finances until 2026 was originally approved by the council in March. But it has now been updated and extended to 2027 – to take account of the financial challenges gripping the council and the rest of the country.
The report says: “Inflation has risen to the highest level in forty years, driven in part by the effects of the Covid-19 pandemic, global supply chain disruptions, Brexit, and the war in Ukraine. Underlying growth in demands have increased on services in children and adults social care, health services, and homelessness adding to the budgetary pressures that Lambeth Council and many other local authorities in London and the UK will have to address.
“There will need to be strong budgetary control in this financial year to balance expenditure and income within budget.”
Update to council finances
The council had put forward a balanced budget earlier this year, but due to the consequences of inflation and rising costs, the latest report estimates that the overall savings required over the extended MTFS period are £42.6million – and the council will need to use some of its built-up cash reserves to smooth the impact in the next two years.
The report sets out the scale of increased demand for key services: some £39.2million of pressures include £10.4million extra for temporary accommodation, £8million for Children’s Services and £1.2million for Adults and Public Health.
Cllr Amos said: “Over more than a decade of austerity, and unprecedented cuts in core funding from government, we have managed to maintain our front-line council services and stay on a sustainable financial footing throughout.
“But the cost-of-living crisis, and particularly spiralling inflation, are having a massive impact on the council’s finances. At a time when the most vulnerable people in our communities are depending more than ever on our services, the money we have available is being squeezed like never before.
“We’ll carry on working hard to provide the best, most efficient services possible to the people of our borough, but this report lays bare the tough choices facing us. We will continue to work in collaboration with local stakeholders and partnerships to deliver essential services for residents at this challenging time.
“As a council committed to equality, we will make savings where required equitably, and adapt our services, as we ensure that Lambeth’s books are balanced over the coming years.”
