Hackney Council is facing a projected £5.4 million overspend on its General Fund for the financial year ending May 2026, a deficit primarily driven by rising costs in children's services and adult social care.
The forecast deficit was noted by the Council's Cabinet at a meeting on Monday, July 20, 2026. The report detailing the overall financial position highlighted significant cost pressures, particularly concerning Special Educational Needs (SEND) provision and the continuing demand for adult social care services.
Financial Breakdown and Contributing Factors
The projected £5.4 million overspend is broken down as follows: Children's and Education services face a £3 million deficit, while Adults, Health and Integration services are forecasting a £4 million overspend. The Housing, Climate and Economy directorate also has a £0.75 million overspend.
Several factors are contributing to these rising costs. In children's services, specifically SEND provision, an overspend of £5.3m within Hackney Education (HE) is attributed to increased costs for Education, Health and Care Plan (EHCP) staffing support, including Education Psychologists (£1.5m). The SEND Transport Service is also under pressure due to home-to-school transport costs (£0.2m). Furthermore, a £2.6m pressure in Early Years is largely due to unachieved savings targets from previous reconfigurations of Children Centres.
Adult Social Care requirements have seen a sustained rise over several years, driven by an increase in service users and the growing complexity of their care needs.
External Pressures and Government Policy
These cost pressures are exacerbated by external factors and government policy. The report highlights that the overspend is largely driven by increasing need for statutory services, which desperately highlights the need for increased funding for councils.
English councils are facing a £7 billion funding gap over the next three years, exceeding current spending on roads, housing, and homelessness combined, a situation attributed to soaring social care demands and temporary accommodation costs.
Mitigation Measures and Future Steps
To address these financial challenges, Hackney Council's Corporate Leadership Team is implementing several measures. The CLT Resources Approval Panel is enforcing recruitment challenges and consistency across the council, requiring approval for all resourcing requirements. The Housing Revenue Account (HRA) Finance Improvement Panel is scrutinising cost pressures and driving management actions to contain expenditure. The Adult Social Care (ASC) Improvement Board is identifying key cost drivers and implementing short-to-medium-term mitigation measures, alongside developing long-term strategies.
Additionally, the Council is considering the continuation of non-essential spend controls, including a freeze, which contributed over £2.2m in mitigations in the 2025/26 financial year. If implemented, this will help mitigate the overspend and protect reserves.
Savings proposals are currently being developed and will be discussed with the Mayor and Cabinet in the coming weeks and months. This will be followed by public engagement and consultation before implementation.
The report was presented to Cabinet on Monday 20 July 2026, and decisions were made to note the overall financial position and delegate authority for grant awards and expenditure reprofiling. Further details can be found in the Public reports pack and Decisions documents.
Potential Consequences
If cost pressures persist or unanticipated financial demands emerge, Hackney Council's uncommitted reserves of £30.7m could be exhausted within two to three years. This could lead to longer waits for adult social care, rising homelessness, and cuts to vital neighbourhood amenities like libraries, road maintenance, and waste collection.
The report also notes that mandatory, demand-led services like SEND are crowding out funding for discretionary community services.
The Council's Transformation Programme has a budgeted savings target of £7.3m for the 2026-27 financial year. However, current trends, including historic overspending and the challenge of meeting this target, indicate the potential exhaustion of reserves within two to three years.
More information on the meeting can be found in the Agenda frontsheet and Supplementary Pack. The minutes of the previous meeting are available here.
