Wandsworth Council is spending £1.9 million on external consultants to develop a “transformation programme” that it hopes will find up to £50 million of savings over the next three years.
The gamble comes as the council confronts what officials have described as “a likely significant drop in overall future funding” and an “ongoing and significant budget gap.”
Cabinet approved the spending in September from the council’s Financial Resilience Reserve. It needs to pay external consultants, it says, because the “skills and capacity at the level required are not available in house”.
The move comes as the council faces a perfect storm of financial pressures: rising demand for social care services, persistent inflation driving up costs, and looming government funding reforms that could cut the council’s grant from central government by between £25 million and £39 million per year by 2028/29.
At the same time, the council this month approved a wide range of capital projects, and has held council tax rises down to 2%, reducing the amount of new revenue – all of which places pressure on its coffers.
The scale of the challenge
The council’s Medium Term Financial Strategy, examined by the Finance Overview and Scrutiny Committee on Thursday, projects a budget gap of £21-51 million over the next three years even before accounting for the impact of the government’s Fair Funding Review.
When those potential funding cuts are included, the gap could reach £46-90 million by 2028/29 – equivalent to more than half the council’s current annual council tax income of £74 million.
The council has reserves of £194 million, but £97 million of this is held in the Financial Resilience Reserve specifically to manage funding risks, and £7.2 million in a Service Transformation Reserve. With planned spending this year of £28 million from reserves – including £16 million on specific priorities like cost of living support and £12 million to plug the budget gap – reserves are projected to fall to £166 million by year end.
The council is quite upfront about what its plan is until the promised savings turned up: spend more of its reserves.
“The Council is in a strong financial position to deal with these challenges as significant reserve balances can be deployed to mitigate against the impact of rising costs and/or grant loss,” the strategy states.
However, it adds: “It is clear the Council will require significant ongoing reductions in spend levels or increases in income to maintain its financial sustainability.” In other words, if those hoped-for savings don’t show up, the council will find itself in financial trouble.
What the Transformation Programme will do
The £1.9 million will fund an initial four-month “discovery” phase starting this autumn, bringing in external consultants to develop business cases across eight portfolios:
- Adult social care and health
- Children’s services
- Resident services (covering housing and environment)
- Place and growth (economic development)
- Corporate services efficiency
- Early intervention and prevention
- Single resident and business interface
- Assets strategy
Chief Executive Andrew Travers told the committee the external support would challenge the council’s current thinking to ensure they’re “identifying all the opportunities that are there” and “targeting the right areas to get the best return for the investment.”
The consultants will help develop detailed business cases showing options, costs, benefits, and proposed changes. Following scrutiny and approvals, these will move into implementation with “rigorous monitoring of progress, costs, and benefits.”
The strategy paper explains consultants will “bring momentum, fresh thinking, and best practice from other organisations, with a requirement to upskill Council staff and deliver social value.”
A longer implementation phase with external support will follow the initial discovery work. The total cost beyond the initial £1.9 million has not yet been determined, though the council notes the transformation programme is expected to deliver savings that “over the years will, of course, far outweigh the investment.”
Where the Pressure Points Are
The strategy identifies several areas driving the budget gap:
Social care demand: Both adult and children’s social care budgets face “escalating demand and rising costs” with “increasing complexity of need.” Adult social care serves 2.4% more residents each year, while children’s services faces pressures from growing numbers of Education, Health and Care Plans for children with special educational needs.
Homelessness costs: The national housing crisis continues to drive up both the number of households presenting as homeless and the cost of temporary accommodation. The council is taking action to boost affordable housing supply, but the pressure shows little sign of abating.
Inflation impact: Although inflation has dropped from its 2022-23 peak, prices remain about 25% higher than in 2020. Recent increases to National Minimum Wage and employers’ National Insurance contributions will put further pressure on contractor costs.
Government funding uncertainty: The Fair Funding Review proposes using a “notional” council tax assumption of approximately £2,000 at Band D to calculate each council’s funding needs. Councils like Wandsworth that charge below this level – currently £507.37 for the council element, or £981 including the Mayor’s precept – could see their government grant cut more severely as the formula assumes they could raise more from local taxation.
Senior Management Restructure
As part of the transformation approach, the council has restructured its senior management, combining the housing and environment directorates into a single “resident services” directorate under Executive Director Paul Chadwick.
The change, approved by Staffing Committee in exempt session without public discussion, aims to deliver what Chief Executive Andrew Travers called “parity of esteem” for social housing tenants with other residents, and to break down silos between services.
When questioned about the decision at committee last week, Travers insisted:
“This is not a downgrade. This is an upgrade of the council’s response to housing.”
Chadwick added: “This is neither a takeover of housing by environment nor a takeover of environment by housing. This is a brand new department, a brand new collaborative department.”
We will examine how the restructure is working in practice in a future report.
What it means for Council Tax
The financial pressures mean residents face significant council tax increases, though the exact scale remains uncertain.
The government’s Fair Funding Review proposals assume councils will charge approximately £2,000 at Band D. However, this figure likely includes the Mayor’s precept of around £500, meaning Wandsworth would need to reach approximately £1,500 for its own element – roughly triple the current £507.37 rate.
Wandsworth councillor Malcolm Grimston, commenting on earlier Putney.news coverage, noted that even with maximum annual increases of 4.99% per year, Wandsworth would likely remain among London’s lowest-tax boroughs:
“It would still take about 12 years – three whole council terms – for Wandsworth to catch Hammersmith & Fulham” at £1,455.
Council tax decisions are made annually each March as part of budget setting, with the 2026/27 rate to be confirmed next spring. The council has not indicated what level of increase it will propose, though the government assumes councils will use their full flexibility to raise rates by 4.99% (comprising 2.99% general increase plus 2% social care precept).
We will provide detailed analysis of council tax implications once the government publishes its provisional settlement in December.
What happens next
The crucial moment arrives in December when the government publishes its provisional local government finance settlement, revealing the actual impact of Fair Funding Review reforms on Wandsworth.
Executive Director of Finance Fenella Merry told the committee the consultation on funding reforms closed in August, with a policy statement expected in late October providing more detail on timing and transition arrangements.
“The Council has submitted a detailed response to the Government’s funding reform consultation and will continue to lobby for a fair and sustainable settlement,” the strategy states. The council is seeking proper recognition of the cost of delivering services and living in London, plus “effective transitional protection” to phase in funding changes.
Until then, residents face months of uncertainty about how deeply the reforms will cut into the council’s grant funding and what that means for service levels and council tax bills.
The transformation programme will need to demonstrate it can deliver the savings required – or the council will be forced to rely more heavily on depleting its reserves and raising taxes to balance its books.
Thursday’s scrutiny committee heard sharp exchanges about whether the council’s previous change programme delivered on its promises.
Budget setting for 2026/27 begins in earnest in the new year, with scrutiny committee reviews in January-February, cabinet recommendations in February, and the final decision by full Council in March. Putney.news will track the process and report on what it means for residents’ bills and services.
