An East London council is facing a significant budget overspend of £17.2 million by the end of the financial year, according to a recent report. The initial forecast of an overspend of £3.8 million at the end of June has now increased dramatically by £13.4 million in just a few months. The council attributes this overspend to increased demand and rising costs due to inflation.
The report highlights several services as ‘key organisational risks’ that could further strain the council’s budget. One area of concern is temporary accommodation, as the council’s own hostels are at full capacity and there have been requests from private landlords to hand back properties. This may force the council to relocate residents to more expensive accommodation like B&Bs and hotels.
In addition, the council is facing pressure in its social care budgets due to a lack of available funding. The report notes that even small changes in the number of people needing support can have a significant impact on costs. The Adult’s Service had been holding health funding in reserve for potential winter pressures, but this has now been released earlier than expected to address budget pressures, posing significant risk.
During a recent Cabinet meeting, council leader Dominic Twomey described the situation as ‘extremely challenging’ and acknowledged the forecast overspend of £17.2 million at the halfway point of the year. He emphasized the significant challenges ahead in the second half of the year, as well as the start of budget consultations for the following year.
Despite the concerns raised in the report, no Cabinet members spoke during the meeting, and the recommendations outlined in the report were agreed upon without further discussion. The council is now facing tough decisions to address the budget overspend and ensure the delivery of essential services to residents.
This financial situation highlights the ongoing struggle faced by local authorities to balance budgets and meet the increasing demands for services. It underscores the need for effective financial management and strategic planning to navigate unforeseen challenges and ensure the sustainability of public services in the long term.
