Greenwich Council faces £118m budget gap by 2030, with immediate mitigation plans
Greenwich Council faces a projected budget gap of £30.9 million in 2027/28, which is forecast to rise to £118.9 million by 2030/31. This significant financial challenge was revealed during a council meeting where the Medium-Term Financial Strategy (MTFS) for 2027/28 to 2030/31 was discussed.
While the immediate gap for 2027/28 is to be mitigated by the use of £18 million in one-off resources, this does not address the underlying structural deficit. To tackle this, the council is developing a new organisational transformation programme, building on the Corporate Plan and Vision 2050. This programme aims to provide a coordinated, long-term approach to organisational change, focusing on improving outcomes for residents and staff, increasing efficiency, and leveraging technology, including artificial intelligence, to modernise service delivery. It is expected to launch later this year.
The primary drivers behind the projected increase in the budget gap are significant pressures in Children's Social Care and Adult Social Care, where expenditure is sensitive to demand, complexity of need, and market cost inflation. These are projected to rise from £30.8m in 2027/28 to £115.3m by 2030/31. Additional pressures include increased financing costs for the Woolwich Exchange development, revised assumptions for future waste contract costs, and the fact that projected income from Council Tax property growth does not offset rising expenditure. While government funding is increasing, it is insufficient to cover these rising costs, with the withdrawal of the Recovery Grant Uplift after 2028/29 contributing to the widening gap in later years.
Councillor Luke Warren, Deputy Leader of the Conservative Group, expressed concern over the council's 'extensive commitments in the Corporate Plan' and how they could be reconciled with the identified financial challenges. The Corporate Plan outlines seven themes with 19 priority outcomes, including commitments related to housing, children's services, health and social care, town centres, and environmental sustainability. The plan states that it is a 'fully funded plan' that 'will need additional investment', with an additional £6 million allocated to help deliver the vision.
Councillor Rachel Taggart-Ryan, Cabinet Member for Finance and Resources, acknowledged the pressures but stated that Greenwich remains in a 'relatively strong position compared to many other councils facing similar issues nationally'. The MTFS report notes that 36 councils, eight of them in London, have required exceptional financial support from central government to set their budgets. Greenwich's books are 'remaining broadly balanced and in a relatively strong position', and the council is 'investing in long-term projects to deliver economic and social benefits', contrasting with other London boroughs that have seen significant investments in town centres being turned down.
The strategy also noted potential opportunities in the flexible use of capital receipts and Section 106 agreements. The 'Flexible Use of Capital Receipts Direction' allows local authorities to use capital receipts to fund qualifying revenue expenditure related to transformation, service reform, and efficiency programmes until 2030. Work is underway to identify qualifying expenditure and assess the extent to which capital receipts could be utilised, though any proposals will require approval by Full Council. Similarly, the council is reviewing opportunities to use Section 106 (S106) agreements and Community Infrastructure Levy (CIL) receipts to support expenditure that would otherwise be funded from the revenue budget, subject to statutory restrictions and confirmation of eligibility.
Risks identified in the strategy include the Dedicated Schools Grant (DSG) deficit, projected to be £27.0m at the end of 2025/26. While current statutory override arrangements permit the exclusion of DSG deficits from General Fund balances, these are time-limited. If these arrangements cease without government intervention, the council could be required to fund the deficit from its own resources, creating 'significant financial pressure and reducing the resources available to support other Council services'. Although the government has announced intentions to address a substantial proportion of historic DSG deficits nationally, the final details remain subject to confirmation, posing a material risk that some level of deficit could fall to the Council to finance.
Furthermore, approximately £12 million of previously agreed savings proposals are under detailed review due to a risk to their delivery, with some potentially proving 'partially or wholly undeliverable'. Deep-dive reviews are being conducted to assess deliverability and identify implementation delays. Failure to achieve these savings would create an ongoing financial pressure equivalent to their value, increasing the budget gap and potentially requiring the use of reserves or alternative measures to maintain a balanced budget.