Hillingdon Council is facing a significant financial challenge with a projected £30.2 million budget overspend, primarily driven by increasing demand for essential statutory services. The unaudited opening reserves position, comprising both General and Earmarked Reserves, stands at £6.7m. The forecast assumes a £1.4m drawdown from Earmarked Reserves to support service-level requirements, bringing the forecast usable general reserves position to £24.9m overdrawn.
The revelation came during a Cabinet meeting on Thursday, 23 October 2025, where Councillor Martin Goddard, Cabinet Member for Finance & Transformation, presented the Month 5 Budget Monitoring Report Public reports pack 23rd-Oct-2025 19.00 CABINET.
The overspend is attributed to several factors, including increased demand for adult and children's social care, a surge in homelessness cases requiring temporary accommodation, and rising costs associated with supporting asylum seekers arriving via Heathrow Airport. Additional funding has been requested from central government to mitigate the high level of costs incurred supporting asylum seekers.
Councillor Goddard emphasized that the pressure on reserves is largely driven by underfunding from central government over the years. The council is also seeking exceptional financial support capitalization of expenditure
from the Ministry of Housing, Communities and Local Government (MHLG).
It must be emphasized that the pressure on reserves is very largely driven by underfunding from central government over the years,
said Councillor Goddard. He also noted the administration's commitment to maintaining low Council Tax and fees to provide high-quality services at a low cost to residents.
Key elements contributing to the £30.2 million overspend include:
- Adult social care and health: £9.8 million due to increased demand and inflationary pressures.
- Temporary accommodation: £5.5 million related to increased demand to mitigate homelessness.
- Place services: £1.9 million, predominantly a shortfall in anticipated income from green waste subscriptions.
- Children and young people's services: £3.9 million, largely due to increased demand for residential care.
- Finance costs: £3.9 million, arising from increased interest burdens and agency staffing costs.
- Corporate services: £400,000 increased costs.
Despite these challenges, Councillor Goddard reported that projected savings of £38.8 million, 61% of the total, are either fully delivered or on track. He also highlighted that an updated assessment of capital expenditure, both for the general fund and for the housing revenue account, would be conducted on the usual quarterly basis, and reported on for Month 6.
Councillor Steve Tuckwell, Cabinet Member for Planning, Housing & Growth, also referenced the financial strain caused by the demand arising out of Heathrow. That continues to be an unfunded burden placed on this borough,
he said.
Councillor Ian Edwards, Leader of the Council, expressed his discomfort with the situation but acknowledged that Hillingdon is not unique in facing such pressures. He welcomed the commitment to a fair funding formula and looked forward to its implementation. The results of the fair funding review should be known in December, with positive indicators that past underfunding suffered by Hillingdon will be addressed positively for 2026, 2027 and future years.
The Cabinet approved a series of financial recommendations, including forward phasing of Housing Revenue Account (HRA) capital programme contingency and transfer of capital budget from the General Fund to the HRA, to address the financial challenges.
While the council awaits the results of the fair funding review and discussions with the Ministry of Housing, Communities and Local Government regarding exceptional financial support, it is implementing enhanced revenue spend controls across all service areas in order to reinforce financial discipline, ensure alignment with the Council's MTFS and mitigate further deterioration of its financial position.
