Lambeth Council is grappling with significant financial pressures, requiring £84 million in savings over the next four years, in addition to £99 million already agreed upon, according to a recent Cabinet meeting.
The council's financial difficulties are attributed to years of underfunding and a surge in demand for services, particularly in housing and social care. Councillor Claire Holland, Leader of the Council, informed the Cabinet that Lambeth, like many other London boroughs, faces similar challenges. She noted that This is a situation that many other local authorities across the country, particularly in London, find themselves in, with 10% of councils in England having approached government for exceptional financial support this year and currently London having the highest number of any region.
The Medium Term Financial Strategy Update Report 2026-2030 highlights the need for these additional savings.
The largest area of demand and overspend is the cost of housing homeless families. The Outturn Report 2024-25 states, the biggest single area of demand and overspend for Lambeth is the cost of housing homeless families representing over half of the overall spend for 2425.
The report also notes rising costs in Adult Social Care related to long-term placements in care homes and supported accommodation, particularly for nursing care for older people needing dementia-related care and over 75's, supported accommodation and residential care placements for adults with learning disabilities with complex needs.
At a Cabinet meeting on Monday 28 July 2025, the Cabinet discussed the Outturn Report 2024-25, which revealed a £60.5 million overspend. Councillor Matthew Bryan voiced concerns about a £27 million deterioration in the final quarter, questioning the drivers behind the overspend in the corporate budget. Officers clarified that interest costs and bad debt provision were the main variances.
The Cabinet also reviewed the Early Year End Forecast 2025-26, which anticipates a reduced overspend of £18 million. Councillor Holland emphasised the importance of transparency with residents as the council addresses these financial challenges. Measures being taken include a council-wide transformation programme, director reductions, a recruitment freeze, and a review of the capital investment programme.
To help identify savings, the cabinet approved a direct award of contract to Newton Limited for diagnostic services and to Xantura Software for identifying savings and cost reduction opportunities. The Early Year End Forecast 2025-26 and Contract Award to Newton Limited and Xantura Software states that the estimated value of the contract awarded to Newton Limited is up to £0.9m. The estimated value of the contract awarded to Xantura Software is up to £1m for 2 years plus a 1-year extension. The expected returns on this investment are not quantified, but the aim is to identify savings, cost reductions, and demand management opportunities.
Councillor Marcia Cameron, Cabinet Member for Economic Inclusion, stated that billions of pounds were stripped from the government, leaving the Labour government twangling around to find the money that was written by government.
Despite the financial difficulties, Councillor David Bridson, Cabinet Member for Healthier Communities (job-share), stated that the council has been able to protect frontline services and the wages of some of its lowest paid members of staff.
*A breakdown of the £99 million in savings is detailed in the Appendix A Early Year-end Forecast 2025-26. The impact of these savings is not detailed in the provided meeting information.
