Wandsworth Council overspent by more than £40 million last year — and fresh figures show the financial pressure is only building.
Rising costs across housing, adult social care and special needs education have forced the council to dip further into its reserves, while mounting debt, pension fund risks, and looming government reforms threaten to make the situation far worse in the years ahead.
The financial problems are detailed in Paper 25-237 [pdf], the council’s provisional financial outturn for the 2024/25 financial year. Although still subject to audit, the figures provide the clearest picture yet of the council’s finances, and confirm that, after another year of overspending, Wandsworth’s piggy bank is noticeably lighter — even if it still holds a relatively solid £193.9 million.
Behind the heathy savings are rising costs and structural problems — all of which are adding up to a potentially serious challenge in the years ahead.
Day-to-Day Services Cost More Than Planned
A £7.3 million overspend in the council’s General Fund comes from several parts of the council’s regular spending:
- Adult social care cost £1.79 million more than expected, mainly because of rising demand and delays in delivering £2 million in planned savings.
- Children’s services (non-schools) went over budget by £690,000, including additional costs for placements and staff.
- A mistake in the newly introduced Council Tax Reduction Scheme led to some households receiving too much support. The error, now fixed, cost the council £1.1 million.
- Planned savings in staffing, operations, and system redesign failed to materialise, with the council continuing to spend as before. That added another £1.5 million to costs.
- Other technical adjustments, inflation-related costs, and redundancy payouts added further pressure.
The council says it will not dip into reserves again in 2025/26, but that commitment will be tested. Local elections take place in May 2026, and there are concerns that much of the mounting financial pressure may not become visible to the public until after the vote. Whether by chance or political design, the tougher decisions appear to have been delayed until the second half of that year.
Housing Budget in Trouble
The council’s Housing Revenue Account (HRA) — a separate, ring-fenced budget for managing and maintaining council homes — had an even worse year.
It overspent by £25.9 million in 2024/25, causing reserves to drop by nearly £39 million overall. That leaves the HRA with £153 million in the bank, down from £193 million a year ago.
The HRA is legally required to balance its own books and cannot be supported by the main council budget. It is funded mainly by tenant rents and service charges. That means the council has three main ways to plug any future HRA shortfalls: raising rents, cutting housing services, or borrowing more money.
HRA reserves are made up of two parts:
- Revenue reserves: for everyday costs like repairs and estate management
- Capital reserves: for longer-term projects such as new builds or major refurbishments
In 2024/25, both were used. £25.9 million came from the revenue side, and nearly £14 million from capital reserves, which are now down to the legal minimum of £25 million.
Special Needs budget shortfall still hidden — for now
The council’s Dedicated Schools Budget (DSB), which covers children with special educational needs and disabilities (SEND), ran a £7.3 million deficit last year. This pushed the total SEND overspend to £21.1 million.
That shortfall is currently being kept off the council’s balance sheet under a government policy that temporarily shields councils from having to account for it fully. That protection was set to expire this year but has been extended to 2028. It buys time, but the deficit is growing and will eventually have to be dealt with.
Financial storm clouds overheard
In addition to all the overspending, there are a further three worrying developments on their way:
- Increasing borrowing: The council is also committed to major regeneration projects and new housing developments that are pushing its borrowing higher. By the end of the decade, Wandsworth’s debt is expected to reach £1.9 billion. That will come with a steep price tag: around £80 million in interest payments over the next five years. If income falls or costs continue to spiral, this borrowing could constrain the council’s ability to protect frontline services.
- Pension Fund in Crisis: The council’s pension fund has lurched from a £350 million surplus to a £7 million deficit in just 12 months. Independent auditors have flagged serious risks and poor performance, warning that the fund lacks transparency and oversight.
- New Funding Rules Could Hit Hard: Next year, the new Labour government is planning to introduce a national reform of council funding. The new model will assume that councils raise at least £2,000 per Band D household from local taxation. But Wandsworth’s famously low council tax brings in just over £1,000 per Band D property. That gap could see the borough lose significant central government funding, starting in the second half of 2026.
Other Councils Building Reserves While Wandsworth Spends Theirs
While Wandsworth’s £193.9 million in reserves is still high, it is falling. Meanwhile, some other councils are increasing their reserves.
General Fund Reserve Levels by Borough (2023/24)
| Borough | 2023/24 Reserves | 2022/23 Reserves | Change (£m) |
|---|---|---|---|
| Camden | £228.9m | £202.5m | +£26.4m |
| Lambeth | ~£221.1m | ~£221.3m | –£0.2m |
| Tower Hamlets | £195.5m | £221.3m | –£25.8m |
| Wandsworth | £193.9m | £201.2m | –£7.3m |
| Hammersmith & Fulham | £117.4m | £135.8m | –£18.4m |
| Islington | £31.7m | £21.7m | +£10.0m |
| Richmond | £10.8m | ~£11.5m | –£0.7m |
The Big Picture
Wandsworth’s finances are still under control — for now. But key parts of the budget are overspending, reserves are falling, and more pressure is coming in the form of SEND costs, HRA pressures, debt repayments, pension fund risk, and central government funding reforms.
Unless things change quickly, the choices available to the council may soon be very limited: raise taxes, cut services, or borrow even more.
