Kensington and Chelsea Council is facing a £4.5 million overspend in the first quarter of the financial year, with a significant cyber attack in November 2025 being cited as a primary cause. The incident affected the whole of the Council's operations to varying degrees.

The Leadership Team meeting on Wednesday, 23 September 2026, heard that the overspend represents 2% of the Council's net budget. Direct costs from the cyber incident, including containment and initial recovery, have reached £2.750 million. Further significant expenditure is anticipated for a recovery programme to strengthen and modernise the DD&T service, though these costs are not yet fully quantified.

Bar chart showing the average number of days to respond to Stage 1 complaints each month
Average days to respond to Stage 1 complaints

Indirect financial impacts from the cyber attack include delayed savings delivery and reduced income generation. Key areas contributing to the overspend include:

  • Children's Services: £1.656 million overspend due to placement pressures, particularly for looked-after children and those with disabilities.
  • Housing and Social Investment: £1.369 million overspend driven by pressures in Temporary Accommodation.
  • Resources: £1.319 million overspend mainly due to income underachievement and delayed savings in Revenues and Benefits, also linked to the cyber incident. Within Revenues and Benefits, a forecast overspend of £1.156m is projected, primarily driven by a £710k shortfall in income from court fees and income collection costs, following the suspension of the service as a result of the cyber incident.

Bar chart showing the S1 Escalation Percentage by Executive Directorate
S1 Escalation Percentage by Executive Directorate

These pressures are partially offset by underspends in other areas, such as the Chief Executive's directorate (£414k underspend) and favourable Treasury Interest Payable (£631k underspend).

Savings delivery is currently at 82% of the total budgeted savings, with £2.533 million (10%) deemed at risk. Reserves have seen a net decrease of £19.609 million in the first quarter. The forecast reserves balance at the end of the financial year 2026/27 is £67.717m.

More details can be found in the Public reports pack for the Leadership Team meeting on 23 September 2026.