Bromley Council is facing a projected budget overspend of £16.16 million for the 2025/26 financial year, according to a report presented to the council's Executive committee.
The overspend is expected to lead to a £12 million reduction in the General Fund balance, although the council plans to utilise earmarked reserves to maintain an overall balance of £20 million. This reduction means the level of general reserves is currently projected to decrease by £12,018,000 to £7,982,000 by 31st March 2026. To retain the general fund reserves at £20 million, a portion of the council's one-off earmarked reserves have been redesignated and utilised to fund the 2025/26 overspend. However, without action to address the budget gap from 2027/28, reserves would be effectively exhausted by 2028/29, leaving the council with a significant and unsustainable budget gap.
The report, which detailed budget monitoring up to December 2025, highlighted significant cost pressures across various council services. The Adult Care and Health portfolio is projected to overspend by £9.35 million, with the Children, Education and Families portfolio facing an overspend of £2.18 million. The Renewal, Recreation and Housing portfolio is also anticipating a £2.83 million overspend.
Several factors are contributing to the projected overspend, including increased demand for services, rising costs of care providers, and a shortfall in investment income from properties. The report also noted full-year cost pressures amounting to £20.55 million.
Adult Care and Health Pressures The Adult Care and Health portfolio's £9.35 million overspend is driven by pressures in Assessment and Care Management (£8.57 million), Learning Disabilities (£85,000), and Mental Health (£710,000). Primary drivers for increased demand include the escalating unit cost price of care providers, the full-year effect of a previous overspend, and the cost of one-to-one care packages for 29 clients projected at £1.16 million. Additionally, 25 new care packages for 18-64 year olds are costing £1.12 million, with 31 new domiciliary care packages adding £271,000 and direct payments forecasting a £190,000 overspend due to seven new packages. Measures being taken to address these costs include transformation projects aimed at supporting residents to remain independent at home, an updated Housing with Care Strategy, a new Learning Disability Strategy, and a refreshed Mental Health and Wellbeing Strategy. The portfolio is also attempting to contain unit costs while meeting statutory responsibilities. Savings are being realised from clients moving to other boroughs, contract adjustments, and recruitment and retention efforts. However, Adult Services remain in a challenged financial position, with peers in most other councils facing similar issues and no tangible social care reform in sight. The risk of buying care from the market at an affordable rate remains high.
Children, Education and Families Challenges The Children, Education and Families portfolio's £2.18 million overspend is largely attributed to Special Educational Needs (SEN) and SEN transport. Similar to national trends, Bromley is experiencing an increase in the number and complexity of SEN, with a 415% national increase and a 43% rise in tribunals since the Children and Family Act. This pressure is exacerbated by a shortage of local specialist provision, leading to high numbers of out-of-borough and independent non-maintained provider placements, which significantly increases transport costs. The cost of independent school providers is approximately double that of local authority provision. In Children's Social Care, the projected overspend of £951,000 is primarily driven by the cost of residential placements for young people. Nationally, market forces have driven up these costs, and a reduction in foster carers means residential care is often the only option.
Renewal, Recreation and Housing Overspend
The Renewal, Recreation & Housing portfolio's £2.83 million overspend has several specific causes. Building Control faces a £199,000 deficit due to under-collection of fees and additional staff costs, partially offset by underspends on running costs. Land Charges has a £107,000 deficit due to the continued industry downturn. Planning has a £231,000 deficit as the number of planning applications has declined. The Community Infrastructure Levy shows a significant £1.37 million deficit because developers are deferring CIL-liable schemes. Allocations and Accommodation has an £918,000 deficit in Temporary Accommodation, driven by the withdrawal of housing providers from the market, pressure from other local authorities and the Home Office, all of which increase reliance on and costs of nightly paid placements. The council has also approved the acquisition of social housing at The Crofton in Orpington, as depicted in artist's impressions of the development. 
Investment Income Shortfall An estimated £800,000 shortfall in investment income from properties is projected for the 2025/26 financial year. This is largely due to the Tilgate Forest Business Park being vacant, which previously generated over £500,000 annually. Ongoing lease renewal negotiations with JD Sports and Lloyds Bank will also reduce annual rental income by approximately £81,000 and £50,000 respectively. A further £81,000 shortfall is attributed to a vacant part of the 2nd Floor at 20-25 Market Square. Strategies to mitigate this loss are not explicitly detailed, beyond general mentions of reviewing tariffs and seeking to maximise income for planning fees.
Government Funding and Policy Changes Beyond general reductions in government funding, several specific changes in central government policy and grant allocations are contributing to Bromley Council's financial challenges. The Household Support Fund (HSF) has been replaced by the Crisis and Resilience Fund (CRF), which has substantially reduced funding and a more narrowly defined scope. Under CRF, local authorities must direct most expenditure towards resilience and community co-ordination rather than direct financial payments to residents, limiting support for those experiencing sustained financial hardship. The Dedicated Schools Grant (DSG) allocation is adjusted based on the latest census data, but the increase in government funding is not sufficient to meet rising costs, particularly with the SEND legal framework favouring parental preference for costly independent provision. The Provisional Local Government Finance Settlement for 2026/27 to 2028/29 indicates significant funding reductions. The Government's 'Fair Funding 2.0 Review' resulted in a redistribution of grant funding rather than a comprehensive consideration of cost and growth pressures facing local authorities. The Department for Education (DfE) offered £9,044,000 in additional High Needs Capital Funding in lieu of a DfE-delivered special free school. Additionally, the Local Electric Vehicle Infrastructure Fund (LEVI) is a fund set up by the Department for Transport and the Office for Zero Emission Vehicles.
Individual portfolio holders will be responsible for addressing the identified issues within their respective departments. The council is also facing future financial challenges due to reductions in government funding and rising service demands.
Budget Monitoring Report December 2025 Public reports pack Wednesday 18-Mar-2026 18.00 Executive
