Financial crisis and Spending Review

Wandsworth Council faces a financial crisis. If no action is taken, our local share of Council Tax will need to increase by 230%.

Spending Review

The new administration is undertaking a comprehensive Spending Review, assessing the difficult choices necessary to reduce the gap.

The first results of the spending review were set out at Full Council on 22 July. A further report setting out the full package of measures will be brought forward later this year.

The spending review is looking at all Council spending and borrowing plans. This includes services the Council is legally required to provide, as well as discretionary schemes and additional local support that have been introduced over time. 

View the Spending Review initial report.

Changes to programmes

The Council’s aim is to reduce the budget gap, slow the growth in debt and protect the core neighbourhood services that residents rely on and value.

This means some programmes will need to change, pause or stop where they are no longer affordable. 

Estate regeneration and housing investment 

The Council remains committed to providing good quality homes and improving housing for residents – ensuring that developments include a range of tenures including intermediate and market sale. Considering the pressures on our finances, our regeneration approach is being reviewed as part of the wider need to reduce non-statutory spending. We are also acutely aware that we need to step up maintenance and repair on existing estates and council stock and this will require significant investment.  

Five schemes will be removed from the new-build programme, Tyneham Close, Lavender Hill, Fitzhugh Estate, Ashburton Estate and Lennox Estate.  

In the case of Tyneham Close, Lavender Hill and Fitzhugh Estate, clear technical advice from officers concluded that the schemes were not viable and should not proceed. Ashburton Estate and Lennox Estate will not be taken forward because the proposals attracted significant opposition from local residents. 

Prioritising cleaner, safer streets  

Even with the financial crisis, the Council will continue to prioritise the everyday neighbourhood services residents rely on. This includes cleaner streets, graffiti removal, same-day cleaning where possible and additional sweeps in priority areas. 

Resources will be refocused on resident priorities, including enhanced street cleaning, graffiti removal, waste services and enforcement in high-footfall areas. Resources will also be refocused on community safety, including additional police officers funded in the current year from Neighbourhood Community Infrastructure Levy released through a review of existing schemes. 

Reasons for the crisis

There are a number of factors contributing to our financial situation.

Government cuts

Wandsworth has been hit hard by national government cuts to its funding. Alongside Council Tax, we rely on this funding to deliver essential local services.

In December the government confirmed we’ll receive £84 million a year less cash by 2030 and be given no extra funding to cover inflation or increasing demand for statutory services.

The grant loss has already started, with Wandsworth receiving £19 million less in 2026/27 than we did the year before. This loss is set to rise significantly each year.

Budget gap

In March the Council set budgets which require the use of £50 million of reserves to balance the current year’s budget. If no action is taken the budget gap would increase to £137 million in 2028/29 and continue to rise each year beyond that.

This is the largest forecast deficit in Wandsworth’s history.

Reserves

Built up over a number of years, the Council has a long tradition of maintaining strong reserve balances which have provided financial security and flexibility to support the services we deliver. They act as a financial safety net, helping the Council manage emergencies, absorb budget pressures and support investment in services.

But reserves are now being used to fund day to day spending at a significant - and increasing - rate, with £50 million needed in 2026/27 alone.

This is unsustainable and, if no action is taken, the Council is projected to have no reserves left by 2028 as they would have been used in full to close the budget gap each year.

Borrowing

Borrowing is used to fund longer term investment in the Council’s assets and infrastructure. In addition to the budget gap, current projections show the Council’s borrowing increasing to £1.14 billion by 2035.

The new administration believes this level of debt plus the interest charged on it is too high, putting too big a financial burden on the Council and, ultimately, future generations of taxpayers.

Questions

View Spending Review questions and answers to find out more about the Council's plans for restoring long-term financial stability in the borough.