Ealing Council is facing a significant projected overspend in its social care budget, driven by the increasing complexity and costs associated with children's social care, adult social care placements, and temporary accommodation for the homeless. The exact amount of the projected overspend is not specified, but is expected to be similar to that reported to Cabinet in Quarter 1.
The projected overspend was discussed at the Overview and Scrutiny Committee meeting on 6 November 2025, where members reviewed a report on local government funding reform and its potential impact on the council's finances. The Local Government Funding Reform report highlighted that while time-limited surpluses in the council's treasury management budget and the use of contingency funds are expected to offset these pressures in the short term, these surpluses are not sustainable and cannot be relied upon to cover service overspendings in future years.
To address the financial challenges, the council is developing transformation plans to reduce the cost base of service provision to ensure the council maintains a balanced and sustainable budget. Managers are continuing to develop these plans, which will need to account for the ongoing pressures experienced in 2025/26 and identify potential savings.
The committee also discussed the government's proposed reforms to local government funding, including the business rates reset and Fair Funding 2.0. These reforms aim to redistribute funding to areas with the greatest need, but their impact on Ealing Council is still uncertain. The council is particularly concerned about the measures of deprivation proposed to be used in updating Children & Young People's Services needs formula. The formula uses a measure of deprivation that does not include housing costs, which in London is a considerable factor in household expenditure. In addition to the deprivation measure, the council also has concerns regarding the impact of the resources adjustment and some aspects of the area cost adjustment.
The Local Government Funding Reform report noted that Ealing's growth in population over the average growth since 2013/14 and relative levels of deprivation are likely to benefit Ealing however other elements of the formulae and their weightings may disadvantage Ealing, particularly in the Children's formula.
The government is expected to publish a policy statement in the autumn of 2025, which will provide greater clarity on the impact of the funding reforms on individual authorities. The provisional Local Government Finance Settlement, which will provide greater certainty on the impact of the funding reform and any changes to the spending review, is expected in December. Final allocations are then expected in late January or early February 2026.
