The emergency steps include plans to cut the number of directors and corporate directors by more than £1million a year by October, a recruitment freeze, an end to all non-essential spending and a pause and review of the council’s capital investment programme to reduce costs.
These savings are being backed by a council-wide transformation programme to support the delivery of savings and to improve services by making them more streamlined and efficient, delivering greater value for money for council taxpayers.
Real terms cut
Following 14 years of structural underfunding, rising need and increasing costs of delivering services following Covid-19, Brexit and the cost of living crisis, Lambeth council’s budgets are under significant pressure. This reflects a wider position in the capital where funding per head in London is more than a fifth lower in real terms than in 2010.
A series of reports to the Cabinet meeting lay out the scale of financial challenge facing the council, with budgets overspent by over £60million last year, largely due to demand for and cost of temporary accommodation for homeless families.
There is also continued pressure in this financial year that is expected to result in a reduced but still significant overspend of approximately £18million, as the council continues to see demand for our services grow, at a time when the council has minimal reserves left to deal with financial pressures.
Future warning
The council’s Cabinet is warned that planned national government changes represent a significant risk to the council’s budget in the years ahead with less money coming to Lambeth.
The Fair Funding Review 2.0 on the government’s proposed approach to local authority funding reform, currently out for consultation, risks leaving Lambeth as one of the worst impacted councils in the country, as money would be redistributed under proposed new funding formulas.
The council has warned the government that these reforms risk undermining Lambeth’s efforts to secure financial stability. Failure of the reforms to account for the impact of housing costs on deprivation in inner-London boroughs like Lambeth that are at the forefront of the housing crisis could lead to disproportionate and unfair outcomes.
Additional savings needed
As a result of these government changes, the continued demand for services like care for vulnerable adults and children, and the need for the council to rebuild its financial stability, the report on the Medium-Term Financial Strategy warns that the council needs to find an additional savings of over £84million over the next four years. This is in addition to the £99million savings that the council is already having to make and that were agreed by Full Council in March.
Word from the leader
Cllr Claire Holland, the Leader of Lambeth Council said: “The continued impact of the demand crisis in local government on top of 14 years of structural underfunding of local government is creating a major financial challenge for councils and Lambeth is particularly impacted by these pressures as an inner-city council.
“The unprecedented demand for temporary accommodation for vulnerable homeless families in particular at a time when there are very few available properties in London is a housing crisis for the families impacted and has also pushed the council’s budgets to crisis point.
“We’re taking the tough action needed to secure the council’s future, making savings across the board while prioritising protecting the services that support the most vulnerable. However, if the government’s funding reforms are not changed to reflect the impact of housing costs on deprivation in inner-London, then we’ll face having to make tens of millions of additional savings at a time when the vast majority of our budgets go on care for vulnerable adults and children.
“We are lobbying the government to work with us to avoid this cliff edge and to ensure we are able to protect key services and to continue to work with the government to deliver their vital growth agenda.”
To find out more
The council reports set out a range of detailed action being taken to deliver existing savings, rebuild reserves, consider the use of capital receipts to support the council’s financial sustainability and to identify further savings across council services and operations. To read the full reports visit moderngov.lambeth.gov.uk.
