Richmond Council is facing a projected £3.1 million overspend on its General Fund for the first quarter of the financial year, primarily driven by significant pressures in social care and homelessness services. This figure was highlighted during a meeting of the Finance, Policy and Resources Committee on Thursday, 24 September 2026.
Despite £5.6 million in mitigating actions being implemented, the council anticipates a substantial shortfall. Councillor Jim Millard, Deputy Leader and Finance and Resources Lead Member, explained that demand for services is outstripping the council's capacity to manage it, even with these measures in place. He stressed that these are statutory services, meaning the council has no choice but to provide assistance to the most vulnerable residents.
The primary drivers for the overspend within social care and homelessness services include increasing placement costs for looked after children
and continuing and growing pressures on temporary accommodation
. For Adult Social Care, the most significant pressure is in services for adults with Learning Disabilities, which is forecasting an overspend of £549,000
. This is attributed to increased supported living costs and higher transition activity than initially budgeted, with transition costs alone projected to be approximately £700,000 above budget due to young people with complex needs moving from Children's Services to Adult Social Care.
Within Children's Services, the children looked after placement budget is the highest area of risk and pressure this year with a projected overspend of £1.81m
. This is largely due to higher weekly placement costs for high-need children's home placements than budgeted. The Home to School Transport service is also projected to overspend due to a significant increase in the number of young people eligible for transport since June last year
. For homelessness, the pressure is driven by increasing numbers of homelessness admissions at levels above those assumed when the budget was set
.
The projected overspend is also partly attributed to changes in interest rates and expected income. Treasury management is forecasting an overspend of £0.85m on its budget, primarily due to external borrowing costs being higher than anticipated. This is a result of global events impacting interest rate predictions, leading to higher borrowing costs than originally planned. The council's Treasury Management Strategy for 2026/27 was set in early January 2026 when the Bank Rate was expected to decrease, but as of July 2026, it remains at 3.75% and is not predicted to fall this financial year. Furthermore, Public Works Loan Board (PWLB) loan rates have remained high due to market demand and the impact of geopolitical events on gilt rates. A key risk identified is that borrowing costs could rise significantly above current projections.
To address these financial challenges, the council is implementing mitigating actions, some of which involve bringing forward longer-term savings
from its Transformation Programme
. This programme aims to deliver £39 million in annual savings by its fourth year
through strategies such as prevention, early intervention, improved use of technology, streamlined processes, and asset optimisation. The savings are predicated on both immediate actions and longer-term preventative measures. The strategy for achieving these savings sustainably is embedded within the programme's six portfolios, focusing on efficiencies, prevention, growth, and revised service delivery models.
The breakdown of the £3.1 million overspend indicates approximately £1.5m for Children's Services (including looked-after children), £0.563m for Adult Social Care, with the remaining amount attributed to homelessness and other central items. While homelessness costs are a major pressure, mitigating actions are expected to manage them within the overall budget.
Further details on the council's financial position and the Transformation Programme can be found in the Public reports pack for the Finance, Policy and Resources Committee.
