Hackney Council has made strides in reducing its projected overspend for the 2024/25 financial year, but significant financial challenges remain, particularly in housing and social care. The update was delivered at a Cabinet meeting on Monday, 23 June 2025.
The council's projected overspend now stands at £27.346 million, a decrease of over £10 million from the February forecast, according to Councillor Robert Chapman, Cabinet Member for Finance, Insourcing and Customer Service. This £10.126 million reduction includes £5.152 million of spending reductions by directorates and £4.974 million in additional mitigations. These spending reductions were achieved across various departments:
- Children and Education: -£950,000
- Adults, Health and Integration: £17,000
- Total – Climate, Homes & Economy: -£3,490,000
- Finance & Corporate Resources: -£505,000
- Chief Executive: -£224,000
However, this improvement relies heavily on the use of reserves, which presents a risk to the council's long-term financial stability. The council is using £27.3 million in reserves to mitigate the 2024/25 overspend, and an additional £10 million in reserves is being used to balance the 2025/26 budget. The 2024-25 Overall Financial Position Report - March 2025 warns that without intervention, continued overspending at the current rate will exhaust these reserves within two years.
Councillor Chapman highlighted pressures in homeless prevention and social care as key drivers of the remaining overspend, citing increased demand and costs in these areas. He also clarified that school closure costs, estimated at £9.1 million, would be largely covered by £8.4 million in capital receipts, not reserves, addressing concerns raised by Councillor Vinnie Lubbock. The remaining £0.7 million will be drawn from council reserves.
The report indicates that the council has invested additional resources to protect services for vulnerable residents, particularly in social care and housing for the homeless. However, the projected exhaustion of reserves raises concerns about potential future service cuts. Councillor Reet expressed concern that vacant posts were likely to become lost posts, with knock-on consequences for residents who are already experiencing underperformance in some service areas in Hackney.
