Richmond Council Slams 'Reckless' Government Funding Cuts, Warns of Financial Crisis

Richmond Council Slams 'Reckless' Government Funding Cuts, Warns of Financial Crisis

Richmond Council has strongly criticised the government's 'reckless' funding cuts, warning of a potential 'cliff-edge' that could severely impact vulnerable residents.

Councillors unanimously passed a motion on Tuesday, 6 October 2026, urging the government to reconsider its financial policies, which they argue are forcing the council to change at an unsustainable pace. The council faces a projected budget gap of nearly £70 million over the next few years, despite demonstrating strong financial stewardship and implementing efficiencies since 2018.

The government's 'Fair Funding Review 2.0' is set to result in a reduction of around £29 million annually by 2028/29, representing a 58% cut to core funding. This has been described by council members as a '£29 million cash grab to fund services in other areas'. The government's rationale for these cuts is framed by the review, which aims to address historic underfunding in poorer regions. However, Councillor Michael Wilson criticised this approach, stating, 'The reward for this council being very good at looking after its finances, being a proper steward of local government, is to punish us and to take money away.'

Councillor Jim Millard, who moved the motion, emphasised that the council is not seeking exemption from reform but requires adequate time to adapt responsibly. Government is asking us to change faster than a responsible council can safely change while demand is rising at the same time, he stated. The council is seeking more time to adapt responsibly, drawing a parallel to local government reorganisations that were given eight years to transform. The government has not provided a specific response to the council's request for more time.

Councillor Sarah Kahn highlighted the human impact of potential funding reductions, noting that the council currently supports 8,328 households under the Council Tax Reduction Scheme. She stated, 'I would urge the government to reconsider what they're proposing.' Councillor Jim Millard also noted that 'It is those people who are most vulnerable who will getમ્પ by these cuts to our funding if we are forced to move at pace.'

Since 2018, Richmond Council has implemented numerous efficiencies and protected services, finding almost £60 million of annual savings and rebuilding reserves. Specific measures include removing minimum Council Tax contributions for the poorest families, setting up a discretionary fund for extreme hardship cases, and continuing funding for mental health support in schools and for care leavers. The council has also introduced Real Living Wage requirements for contractors, implemented a Climate Emergency Strategy, and delivered increased investment in road and pavement repairs, as well as SEND school places. A package of £4.5m within the Cost of Living Fund has been provided for financially vulnerable households. Other initiatives include a Voluntary Council Tax Contribution Scheme, increased investment in the community safety team, support for refugees to achieve Borough of Sanctuary status, driving the delivery of more genuinely affordable housing with a pipeline of over 1,000 homes, and introducing family hubs for integrated services.

The council's dire financial situation was further detailed in the Medium-Term Financial Strategy (MTFS), which projects a cumulative budget gap of nearly £70 million by 2030/31. This gap is attributed to government funding cuts, rising demand pressures, and inflation. Specific pressures include increased demand and complexity across adult and children's social care and homelessness services, and inflationary increases on salaries and contracts. The MTFS indicates that without intervention, the council's reserves could be depleted within four years.

The council is undertaking an ambitious transformation programme aiming to deliver £8.2m in 2026/27, with a potential for £39.2m in ongoing revenue savings across the whole programme. The Transformation Programme aims to redesign services, improve productivity, make better use of technology, and reduce demand where appropriate. The MTFS Options Review will immediately consider all areas of discretionary spend and identify areas for further efficiencies and cost reductions.

The MTFS also highlighted pressures on the Dedicated Schools Budget, with projected deficits of at least £12 million across 2026/27 and 2027/28.

The council is consulting residents on its plan to submit proposals under the Sustainable Communities Act to challenge the government's funding reforms. The proposed actions include seeking changes to funding allocations, the transition period for a reduction in funding, and the allocation of new income raised. The government is required to consider proposals submitted under the Act and publish a decision in writing about whether they will implement them. If the government turns down the request, they must set out the reasons, and the council can then appeal this decision. The consultation document can be found here.