Wandsworth Council has reported a significant budget overspend of £9.8 million for the 2025/26 financial year, a deficit primarily driven by increased demand and costs in adult social care and homelessness services.
The council's Cabinet, meeting on Wednesday, July 29, 2026, reviewed the financial outturn for the year. Councillor Peter Graham, Deputy Leader of the Council and Cabinet Member for Finance, highlighted the pressures faced, stating, As was reported throughout the year, General Fund revenue service committee budgets were and continue to be under significant pressure from high demand and high costs particularly in adult social care, and homelessness.
Adult Social Care Pressures
The high demand
in adult social care was attributed to continuing and increasing pressures on demand, which have contributed to the year end position.
The Health Committee report noted that The overspend reflects a continued trend of increased demand for services and escalating costs of service provision due to inflationary pressures and increasingly more intensive needs of people receiving Social Care packages.
This included an increase in the number of people receiving care within the Older People and Physical Disability service and higher costs for placements for people aged 18 to 25 in Learning Disability Services. The high costs were exacerbated by New Care Home packages in 2025/26 were, on average, more expensive than those that ended, creating an ongoing cost pressure as packages turn over.
Homelessness Services Homelessness services also contributed to the deficit. The projected increase in homelessness approaches from 2022/23 to 2025/26 underscores the growing challenge in this area.
Other Contributing Factors Beyond social care and homelessness, other factors contributing to the overspend include General Fund revenue pressures, with an overspend of £8.0m (2.5%) on service budgets, partially offset by improved treasury investment income and increased government grants. The Housing Revenue Account (HRA) faced increased costs for repairs, maintenance, and building safety compliance. Additionally, the Dedicated Schools Budget (DSB) saw increased demand for high needs placements and the cost of independent school placements within the High Needs Block.
Bradstow School Closure The closure of Bradstow School during the year also contributed to the deficit. The council has launched legal action against Kent County Council in relation to unpaid fees to potentially recover some of the debt. While the expected amount to be recovered is not specified, any capital receipt from the sale of the property will generate a future benefit to the Council.
Addressing the Overspend and Future Outlook
Wandsworth Council has launched a comprehensive Spending Review across all service areas in order to address these pressures, the impact of a significant loss of government funding resulting from the Fair Funding Review 2.0, increasing debt and depleting financial reserves.
This review aims to identify efficiencies and savings to balance the council's budget.
Reserves will be carefully controlled and their use aligned with any necessary investment required to deliver a sustainable financial future. The Council will also need to monitor the overall position carefully within the Medium Term Financial Strategy to reduce recurring expenditure, identify sustainable income and savings options, and ensure that reserve balances remain adequate to manage financial risk and protect the Council's resilience.
The projected impact of this overspend on future budgets is significant. Without further action, balancing the budget would require a 230% council tax increase by 2030. The Council will need to draw on reserves to meet some of these pressures, which cannot be used indefinitely. The Medium Term Financial Strategy, to be presented in September, will outline how the Council will address the £137m budget gap (and growing) in 2028/29 before any assumed delivery of efficiency programme savings.
The HRA also faces pressures from building safety, repairs, and climate change initiatives, requiring careful management to ensure affordability in the longer term. The Dedicated Schools Budget deficit of £32.5 million will be carried forward, and future government support is contingent on the successful implementation of the SEND Reform Plan.
The council is also exploring options for managing its financial position, including the potential for council tax increases beyond the referendum limit in future years.
The outcomes and proposed actions of the Spending Review will be presented to the Cabinet in September as part of the Medium Term Financial Strategy. Additionally, the Council is developing a borough anti-poverty strategy to address structural factors underpinning poverty and is reviewing its capital program to reduce borrowing. The HRA will also need careful management of costs related to building safety, repairs, and climate change.
More information on the council's financial position can be found in the Public reports pack for the Cabinet meeting on July 29, 2026.
