Wandsworth council faces £4.3m budget shortfall

By Charlotte Lillywhite, Local Democracy Reporter

A council is facing a budget shortfall of £4.3m even if the authority increases council tax by 4.99 per cent over the next year.

The predicted budget gap for Wandsworth council has fallen from the £37.3m that was estimated last year, but the authority is still facing pressures from inflation.

The council will need to use roughly £4.3m worth of reserves, or cut its spending by the same amount, to maintain a council tax increase within 4.99 per cent in 2023/24, according to a fresh report based on latest estimates.

Fenella Merry, the council’s director of resources, said the figure had “changed significantly” since the authority’s medium-term financial strategy was presented in September 2022 – when the budget gap was predicted to be £37.3m for 2023/24 to maintain council tax increases within 2.99 per cent.

Ms Merry told the council’s finance committee on Wednesday that the changes mainly related to the local government finance settlement – the yearly determination of funding to local authorities from central government.

She said the settlement was “much more in favour of local authorities than we were led to believe back in September, so the government has listened to the sector and it’s put some more money into particularly social care and that’s reflected in Wandsworth’s settlement”. 

The provisional settlement was announced on December 19, with an average 9.2 per cent increase in core spending power in 2023/24.

Officers have found savings in the council’s budget of roughly £7.01m for 2023/24, compared to £1.08m in 2022/23, according to the report.

Conservative councillor Caroline de La Soujeole asked Ms Merry at Tuesday’s meeting “how achievable those numbers are”.

Ms Merry said: “Officers have looked through and are confident, as confident as we can be when we’re talking about transformation and service change, we’re confident that they all are deliverable.”

The budget gap estimated in the report rises to £24.13m in 2024/25 and £40.97m in 2025/26. 

Conservative councillor Peter Graham asked: “Why is it that there is a reliance on [reserves] and why is it that the council has rejected finding further efficiencies in order to balance this as opposed to drawing down on reserves in this way?”

Ms Merry replied: “It’s one word – inflation.” 

The budget, including council tax, for 2023/24 and the three-year budget framework will be set in March. At that stage, there will be more information on grants, levies, precepts, inflation estimates, business rate growth, the council’s response to the cost of living crisis and reserves.

The report says, based on initial estimates, “further budget reductions, the use of balances/earmarked reserves or additional council tax income will be required to balance the budget”.

Labour councillor Angela Ireland, cabinet member for finance, said the setting of council tax will be an “informed decision” and the authority “will set a balanced budget”.

Pictured top: Wandsworth Town Hall (Picture: Google Street View)