Westminster City Council has reported an £8.2 million overspend for the 2025/26 financial year, a figure primarily driven by escalating costs in temporary accommodation and pressures within children's social care.
The council's Cabinet met on Monday, July 13, 2026, to review the financial outturn for the year. The overspend, which represents 3.9% of the approved budget, was significantly influenced by a continued steep increase in demand for temporary accommodation combined with a shortage of supply and higher costs of emergency accommodation.
A recent cyber incident further disrupted the delivery of the temporary accommodation strategy, delaying property purchase completions and slowing the influx of lower-cost options, which hindered the council's ability to prevent homelessness and secure affordable placements.
Pressures in children's social care also contributed to the overspend, stemming from increased complexity of need
and ongoing pressures from prior year disputed costs.
Contract inflation above budgeted provisions, increased legal costs, and higher transport expenses also played a role.
These financial challenges were partially offset by a significant increase in parking income. Parking income exceeded budget by £14.9m, with Penalty Charge Notice (PCN) income alone seeing a substantial rise. This surge was attributed to both higher ticket volumes (up 18% year-on-year) and increased penalty charge levels following the Mayor of London's fee uplift. Paid-for parking income also outperformed budget by £2.1m, boosted by stronger weekly income after the introduction of emissions-based charging and a slower-than-expected behavioural response from motorists.
The £8.2 million overspend will be funded from the council's General Fund balance, reducing it to £51.5 million. The report indicates that a healthy balance for local authorities is generally considered to be 10% of the budget. Westminster's current balance of 24% is noted as recognises Westminster's exposure to large fluctuations in economic activity that affects fees and charges income as well as providing additional cover for the current volatility in temporary accommodation, social care and other high demand services.
The Housing Revenue Account also reported an overspend of £2.1 million. This was primarily due to significant pressures arising from new legislative and regulatory requirements.
This overspend will be met from HRA reserves, with the aim of restoring balances to the previously anticipated level by March 2027.
To address the underlying causes of the temporary accommodation overspend, the council has implemented a coordinated Homelessness and TA Improvement Programme.
This programme aims to manage demand, cost, and service delivery by expanding affordable temporary accommodation supply, accelerating move-on from temporary accommodation, strengthening homelessness prevention, and improving income recovery. For children's social care, an additional budget provision of £3.3m has been allocated for 2027/28 in the updated Medium Term Financial Plan to account for expected continued high-cost placements.
The report does not explicitly detail the projected impact of this specific overspend on future council services or budgets beyond the reduction in the General Fund balance. Further details on the council's financial outturn can be found in the Public reports pack for the Cabinet meeting on July 13, 2026.
