Council Launches Spending Review Ahead of 'Financial Crisis'
Warns council tax levied by borough could triple if action not taken
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July 24, 2026
Wandsworth Council recently elected Conservative-led administration has warned that it is facing a financial crisis of unprecedented scale, with officials stating that without urgent intervention the borough’s share of Council Tax would need to rise by 230 per cent simply to keep services running, effectively tripling the amount payable.
The warning was issued as the new administration published the first outcomes of its Spending Review, presented at a meeting of Full Council on 22 July, and intended to set out the choices required to stabilise the borough’s finances.
The review is examining every part of the Council’s spending and borrowing plans, from legally mandated services such as adult social care and children’s services to discretionary programmes and additional support schemes introduced over recent years. The administration says the aim is to reduce the budget gap, slow the growth of debt and protect the everyday neighbourhood services that residents rely on, even if that means pausing or cancelling programmes that are no longer affordable. A more detailed package of measures will be published later this year.
The Council says that its financial position has deteriorated sharply following national changes to local authority funding. Under the Government’s Fair Funding Review, Wandsworth will receive £84 million less each year by 2030, with no additional support to cover inflation or rising demand for statutory services.
The first year of cuts has already taken effect, with the borough receiving £19 million less in 2026/27 than the year before. The Council argues that the new funding formula downplays the pressures faced by inner London boroughs, while assuming that Wandsworth can raise far more through Council Tax than is actually possible. The Government’s calculations are based on a notional Band D Council Tax of £2,060, compared with the borough’s actual rate of £510, leaving Wandsworth assessed as far wealthier than it is in practice.
At the same time, demand for statutory services has risen sharply. Temporary accommodation costs have more than doubled since 2022, with the number of households in temporary housing rising from 3,375 to more than 5,000. Adult social care client numbers have increased by 18 per cent, adding £32 million a year to budgets, while children’s social care has seen rising complexity of need and higher placement costs. Inflation has added almost £100 million to the budget each year since 2022, and staffing costs have risen by almost 20 per cent due to national pay settlements.
Borough's projected deficit. Picture: Wandsworth Council
The Council’s reserves, historically one of its greatest strengths, have been used increasingly to fund day-to-day spending. The current budget requires £50 million of reserves to balance the books this year alone. If no action is taken, reserves will be fully exhausted by 2028, leaving the Council without any financial safety net. The budget gap is projected to reach £137 million by 2028/29, rising to £153 million the following year, the largest deficit ever forecast in Wandsworth.
Projections show the borough running out of reserves. Picture: Wandsworth Council
Borrowing has also risen sharply. Current projections show Council debt increasing to £1.14 billion by 2035, with interest payments doubling that figure over time. The administration says this level of debt is too high and places an unacceptable burden on future taxpayers, particularly as interest rates have begun to rise again after a period of stability.
Debt is predicted to top £1 billion. Picture: Wandsworth Council
As part of the Spending Review, the Council has begun reviewing regeneration schemes and discretionary programmes. Five estate regeneration projects — Tyneham Close, Lavender Hill, Fitzhugh Estate, Ashburton Estate and Lennox Estate — will be removed from the new-build programme. Officers advised that the first three were not viable, while the latter two faced significant opposition from residents. The Council says it remains committed to improving housing quality, but acknowledges that major investment will be needed to repair and maintain existing estates, particularly after a 2024 inspection found serious failings in safety and stock condition, including 40 per cent of properties having out-of-date electrical safety certificates.
Despite the financial crisis, the administration says it will protect everyday neighbourhood services. Resources will be refocused on street cleaning, graffiti removal, waste services and enforcement in high-footfall areas. Additional police officers will be funded through a review of existing Community Infrastructure Levy allocations, with the aim of strengthening community safety while other programmes are scaled back.
The Spending Review will continue through the autumn, with a full set of proposals expected later this year. The Council says its priority is to reduce the budget gap, slow the growth of debt and limit any future Council Tax increases, while protecting the services residents rely on most.
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