Merton Council is facing a projected revenue overspend of £2.619 million for the 2026/27 financial year, according to the Period 3 Financial Monitoring Report presented to the Cabinet. The report, which covers the financial position up to June 2026, highlights significant pressures within Children's Social Care and the provision of temporary accommodation as key drivers of the projected deficit.
Children's Social Care is forecasting an overspend of £1.775 million. This is primarily driven by sustained growth in demand and increasing complexity across the residential placement budget, particularly impacting Children with Disabilities services. A small number of high-cost care packages for children with complex needs are having a significant impact on expenditure. National pressures stemming from market conditions and for-profit operators in the sector are also affecting foster and residential placements. Furthermore, increased unit costs for residential placements, reflecting a national challenge, are contributing to the financial demands for local authorities, especially for new placements for young people with complex and high-risk needs.
To address these pressures, the council is progressing work to establish an in-house children's home and has completed a broader piece of work with local residential and semi-independent providers. Other actions include resource redirection plans, a strengthened provider engagement and brokerage approach, a continued focus on placing children in foster care with targeted recruitment and retention activity, investment in wraparound support for in-house fostering placements, improved placement stability planning, negotiating fees with independent providers, active pursuit of contributions from health partners, expansion of preventative and edge-of-care services, strengthening support packages for children with disabilities, continued delivery of family support and safeguarding interventions, review and standardisation of translation and interpretation commissioning arrangements, implementation of a revised family time model, and strengthened SEN transport controls.
Temporary accommodation costs are also contributing significantly to the overspend, with a projected £1.149 million deficit in this area. The council is experiencing sustained pressure due to an increase in the number of households requiring temporary housing. The Housing Service has worked closely with the Delivery Unit to implement a detailed plan to reduce costs and numbers in temporary accommodation, with weekly monitoring and remedial action taken where necessary. Governance is in place with weekly updates to the Executive Director and presentations to senior leadership. The projected outcome is a downward trend in placements, with a forecast that the number of households in temporary accommodation will reduce to 565 by year end, including 49 placements in acquisitions.
Adult Social Care is forecasting an adverse variance of £539,000. This reflects sustained demand and placement pressures across homecare, residential care, nursing care, and complex packages. The increasing complexity of need, including more 24-hour placements, remains a main cost driver. The Access and Assessment
service specifically is forecasting a £629k adverse variance, with net placements forecasting a £4m adverse variance as of June 2026. The report indicates rising placement costs across various categories, including Older People,
Learning Disabilities,
and Mental Health.
Public Health, however, is projected to be on budget.
A comprehensive recovery plan is in place to reduce the forecast overspend and bring the budget back in line. The council's financial monitoring report can be found in the Public reports pack Monday 21 Sep 2026 19.15 Cabinet.
