Westminster City Council experienced a £13.6 million overspend in the 2024/25 financial year, primarily due to increased temporary accommodation costs and overspends in Children's Services, but the deficit will be offset by using earmarked reserves.
The Revenue and Capital Outturn 2024/25 report, presented to the Audit and Performance Committee on Tuesday, indicated that the General Fund revenue outturn showed this overspend, which equates to 6.6% of the approved budget of £205.545m. The Housing Revenue Account (HRA) also reported a £4.1 million deficit, which will be covered by HRA balances. According to the report, the net overspend will be fully offset using an earmarked reserve specifically for this purpose.
The report highlighted expenditure variances across council services, with significant overspends in Housing and Commercial Partnerships due to temporary accommodation costs, and in Children's Services. However, these were partially offset by positive variances in parking income and underspends in some departments.
The increase in temporary accommodation costs was attributed to a significant increase in demand for temporary accommodation combined with a shortage of supply and higher costs of emergency accommodation,
according to the Revenue and Capital Outturn 2024/25 report. To address this, the council is considering measures such as continuing to reduce use of more expensive units and increasing the proportion of TA stock in direct ownership through increased purchases
and investigating innovative longer-term leasing arrangements.
Children's Services experienced overspends due to several factors, including: an increase in costs for Looked after Children Placements
, a shortfall in funding from the North West London Integrated Care Board for joint funding of placements with health needs
, an unbudgeted spend for families with no recourse to public funding (NRPF)
and an overspend on legal costs due to court delays in care proceedings,
as detailed in the Revenue and Capital Outturn 2024/25 report.
Despite the overspend, the Council's General Fund balance remains unchanged at £59.7 million, as the deficit is being covered by earmarked reserves. According to the report, the council maintains general reserves to mitigate risks and manage unforeseen events or economic volatility. These reserves also support the delivery of medium-term savings and can help address one-off shortfalls during the annual budget-setting process, and the current reserve level is considered robust and sufficient to absorb in-year pressures.
The Treasury Management Strategy Outturn 2024-25 report, also presented at the meeting, provided a review of the council's investment portfolio and borrowing strategy. As of 31 March 2025, net cash invested was -£109.3m, a decrease of £286.4m compared to the previous year. However, the council's budgeted investment return for 2024/25 was £41.483m, and performance for the year reached £49.706m, resulting in £8.206m above budget. At £572.7m, the council's borrowing at 31 March 2025 was within the Prudential Indicator for external borrowing.
The Audit and Performance Committee also reviewed the draft 2024-25 Statement of Accounts Report. These accounts report a net asset position of £3.208bn, with a movement of -£89m in comparison to the prior year, which is a variance of -2.8%. The report also states that this shows the Council's assets and liabilities have remained stable. The public inspection period began on 25 June and is due to end on 5 August 2025.
Furthermore, the AP Committee Report HIA Annual Report 2024-25 summarised the work of Internal Audit in 2024/25, and provided the Head of Internal Audit's opinion on the adequacy and effectiveness of the council's governance, risk management and control environment. From the Internal Audit work undertaken in the financial year 2024/25, reasonable assurance can be provided that systems of internal control in place are effective with the majority of the finalised audit work receiving a positive assurance opinion.
The WCC Counter Fraud End of Year Report 2425 noted that for the period 1 April 2024 to 31 March 2025, the Corporate Anti-Fraud Service (CAFS) identified 179 positive outcomes. The fraud identified has a notational value of over £1,000,000 and includes Housing application fraud, Right to Buy, Tenancy Fraud (Council and Registered Providers), Insider fraud, High/Medium risk fraud (e.g. NNDR, Procurement, Duplicate invoices), Low-risk fraud (e.g. Freedom Passes, Council Tax SPD), and Parking (B/Badge & Residents Permits).
The Annual Report of the APC - 8 July 2025 summarised the work of the Audit and Performance Committee over the municipal year 2024/25. The report will then be forwarded to Full Council for information.
The Revenue and Capital Outturn 2024/25 report also indicates that Environment and Communities had a positive variance primarily due to increased Penalty Charge Notice income and Paid for Parking income exceeding budget.
