Wandsworth Council Projects £5.3m Budget Overspend Driven by Social Care and Housing Pressures

Wandsworth Council Projects £5.3m Budget Overspend Driven by Social Care and Housing Pressures

Wandsworth Council is forecasting a £5.3 million overspend for the current financial year, driven by increased demand in social care and children's services, alongside rising costs in housing.

The projected overspend, detailed in the Quarter 1 Financial Monitoring report for 2026/27, represents 1.7% of the council's General Fund revenue budget. This forecast assumes that £12 million in mitigating actions will be successfully implemented throughout the year.

The primary drivers for the projected overspend are demand pressures within Adult Social Care, particularly for older people and adults with learning disabilities. Children's Services is also facing increased costs due to the rising complexity of need and placement costs.

Breakdown of Overspend:

• Health (primarily Adult Social Care): £3.477 million overspend, driven by demand pressures in Services for Older People, Services for Adults with Learning Disabilities, and increasing complexity of need.
• Children's Services: £1.160 million overspend, primarily due to rising complexity of need for children looked after, increased costs for children with disabilities, and pressures in the placements market.
• Housing: A near breakeven position is forecast, with an overspend of £43,000, but this relies on £4.593 million of mitigating actions. The primary pressure is continuing levels of growing net demand for temporary accommodation.

Inflation contingency also contributes £1.2 million to the overall projected overspend.

Housing Pressures Detailed

Housing services are also under pressure due to growing demand for temporary accommodation. This is driven by several factors, including rising homelessness, exacerbated by the Homelessness Reduction Act 2017 and a difficult housing market with rising rents and fewer affordable homes. The government's subsidy cap for housing benefit in temporary accommodation, limited to the January 2011 Local Housing Allowance rate, fails to keep pace with actual costs, creating a widening gap for the council. Furthermore, welfare reforms affecting Universal Credit and housing support provisions can increase homelessness and demand on council services.

The Local Housing Allowance (LHA) freeze for 2026/27, despite continued private sector rent growth, also contributes to a shortfall between housing support and actual rental costs.

Mitigating Actions and Associated Risks

To address these financial challenges, the council is implementing a range of mitigating actions, primarily through its Transformation Programme. This programme is managed via a Spending Review Implementation Programme and is expected to deliver significant savings over several years. The key components are organised into six Portfolios and two supporting workstreams, with projected savings totalling £78.8m by 2030/31. The programme requires an investment of up to £29m over its lifetime.

Key components and expected savings include:

• Adult Social Care & Public Health Portfolio: Expected saving of £21.9m.
• Children's Services Portfolio: Expected saving of £10.7m.
• Housing Portfolio: Expected saving of £21.3m.
• Enabling Corporate Core Portfolio: Expected saving of £9.6m.
• Environment Portfolio: Expected saving of £11.7m.
• Growth & Place Portfolio: Expected saving of £3.6m.

However, officers acknowledge that the delivery of these mitigations carries risks, particularly concerning the timing and achievement of savings. Later year savings, in particular, carry delivery risk, requiring strong programme oversight. The Medium Term Financial Strategy 2026/27 (Paper No. 26-237) also highlights risks such as reliance on government grant funding, the widening gap in temporary accommodation subsidies, inflation and interest rate volatility, and sustained pressures in social care for both adults and children.

If these risks materialise, the potential impact is a deterioration of the council's financial position, an increased call on reserves, and potential impacts on service delivery.

Impact on Frontline Services

These financial pressures are projected to impact frontline services for residents. In Adult Social Care, demand for services for older people and adults with learning disabilities is increasing, alongside greater complexity of need and care market pressures. For Children's Services, rising complexity of need for children looked after, increased transport costs for children with special educational needs and disabilities (SEND), and a strained placements market are key concerns. The Medium Term Financial Strategy 2026/27 (Paper No. 26-237) also notes the sustained period of significant investment, both financially and in service improvements for Children's Services, which is now facing continued pressure.

Furthermore, proposed changes to the Council Tax Reduction Scheme, including the removal of the WA1 category, are expected to result in households paying more Council Tax, disproportionately affecting disabled residents, carers, and families with young children. The proposed replacement of the Access for All scheme with a new, more targeted scheme could also limit provision and affect vulnerable groups. The suspension of the Wandsworth Grants Fund for four years is also expected to have a negative impact on disabled residents, children and young people, and older people.

The Finance Overview and Scrutiny Committee reviewed these projections, with councillors expressing concern about the overspend and questioning the confidence in achieving the planned efficiencies. The committee was informed that while some mitigations are expected to materialise, there is a risk that the £5.3 million overspend could increase.

Public reports pack 08th-Oct-2026 19.30 Finance Overview and Scrutiny Committee