Council faces “impossible choices” in battle to balance budget due to temporary accommodation crisis

The council’s Cabinet will consider dimming streetlights during the middle of the night, renting out space in council offices, increasing income from services like parking and events in parks and consulting on reducing the number of children’s centres in a bid to save £50million.

Cllr David Amos said: “This is the worst funding crisis that the council has ever faced, and we need to be open with residents that saving this amount isn’t possible without having a major impact on the services people rely on.

“The need to find these significant savings is driven by over a decade of austerity by underfunding by previous central governments, rising inflation and demand for public services biting down hard on the financial sustainability of local government services.

“The demand for emergency housing for families in the borough alone is costing us more than £250,000 a night, a direct result of the national housing crisis which impacts places like Lambeth most of all.

“Because the council is legally required to fund these services and legally required to set a balanced budget, that forces on us impossible choices that mean cuts to other services.”

Lambeth’s core government funding has reduced by 34 per cent in real terms since 2010, despite population increases, rising demand for social services and increased responsibilities from central government. Combined with an unprecedented demand for services including temporary accommodation which is now costing £90 million a year – £29 million forecasted over budget – the council must make savings of over £69 million over the next four years.

The council has already taken urgent in-year action to deal with a projected overspend of £34 million this year which is driven largely by demand for temporary accommodation which is up by a third since 2023. The action includes putting in place emergency spending controls, which include reviewing all recruitment and non-essential spend, ending agency placements, and ending consultancy and advisory contracts unless they deliver essential services for residents.

However, despite robust action in every area, the continued rise in demand-led services like housing and social care and rising inflation means that the council faces having to cut vital services for residents in the next two years, with services likely to be cut back to legal minimal levels unless there is further government support to councils that are facing unprecedented demand pressures.

Cllr Amos said: “We are proud that we have managed to maintain funding for vital services that support vulnerable residents, from our major cost of living support package and services that support care leavers to refuge beds for women and girls who are victim to violence and domestic abuse.

“Our aim is to maintain those services but the financial situation we face is stark and substantial, and without more government support councils face impossible choices about their future.”