Tower Hamlets Council is facing a projected budget overspend of £18.6 million for the financial year 2025-26, according to a report presented to the Overview & Scrutiny Committee on Monday, March 23, 2026. The projected overspend represents an improvement of £0.3 million compared to the previous quarter's forecast.
The council is experiencing increased demand in several key areas, including children's social care, temporary accommodation, adult social care, and SEND (Special Educational Needs and Disabilities) provisions. These pressures are described as being felt nationally across local authorities. Specifically, the increased demand in children's and adult social care is attributed to these wider national pressures.
To mitigate these financial pressures, the council has utilised various funding sources, including parking reserves, Section 106 funds, and Public Health funds. Earmarked reserves have also been drawn upon, alongside £4 million from an Indian mitigation fund
and a corporate revenue contingency of £5 million. The £4 million from the Indian mitigation fund was drawn to mitigate a projected overspend on the General Fund.
The Dedicated Schools Grant (DSG) shows a significant overspend of £9.9 million, a deficit common among councils nationwide. The Housing Revenue Account (HRA) is also projecting a £3.1 million overspend, primarily attributed to repairs and ongoing costs. A substantial £609 million investment is planned to address these HRA issues, which the council states will help the HRA going forward to prevent future overspends in these areas.
Despite these challenges, the council reports that savings targets of £30.2 million are largely on track, with £28.5 million achieved or forecasted. The report does not specify which areas are contributing most to the achieved savings.
The capital programme is forecasting a minimal variance of £0.1 million.
During the meeting, Councillor Saied Ahmed, Cabinet Member for Resources and the Cost of Living, presented the Q3 Budget Monitoring report, which can be found in the Public reports pack. He highlighted the ongoing efforts to control expenditure through various panels and review processes, including the People's Resource Board and spending review panels.
Councillor Gulam Kibria Choudhury raised concerns about the £22.9 million overspend in adult social care. Councillor Ahmed explained that £22.5 million has been allocated in the upcoming budget to address this, and a dedicated adult social care board is in place to monitor pressures. Georgina Chimbani, Corporate Director for Health and Social Care, elaborated on the complexities of adult social care, emphasizing efforts to promote independence and ensure efficient staff utilization.
Further details on the budget monitoring can be found in the Budget Monitoring 2025-26 - Quarter 3 Forecast Outturn.
