Southwark's £102m Budget Gap: Inflation Is £97.5m of It

Southwark Council has published the first line-by-line breakdown of its £102 million budget gap. Rising costs from inflation account for £97.5 million of the pressure. The cut in government funding accounts for £28.1 million.

Updated 12 October: the council launched its budget consultation on 8 October. Drop-in events run until 14 November, including Camberwell Leisure Centre on 13 October and Dulwich Leisure Centre on 5 November. The dates are below.

The figures were given in a written answer to councillors at Council Assembly on Wednesday 23 September. Councillor Andy Bates had asked for the breakdown because the council’s messaging “repeatedly” blamed the government for the whole gap.

The breakdown

The council’s answer lists these drivers of the gap, in the members’ question time responses (question 17):

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The answer does not state the period. The council’s Financial Remit report to the Executive on 20 July does. It describes a £102 million gap over the three-year medium-term financial strategy, covering 2027-28 to 2029-30.

How the gap grew from £81m

The same July report says the gap was £81 million when Council Assembly set this year’s budget in February 2026. The July report, under the new Green and Liberal Democrat administration, raised it to £102 million. It says this “reflects to a large degree a truer assessment of the ongoing cost of temporary accommodation”.

The report also adds new spending, each item to be matched by savings elsewhere:

• £10 million a year more in the temporary accommodation base budget
• £5 million more held in a temporary accommodation contingency
• £1 million a year for new commitments, not yet allocated
• £1.35 million more for the Strategy and Communications budget
• £151,000 for an enhanced councillor support team

Those additions push the gap for next year alone, 2027-28, from £28.2 million to £45.6 million.

The report says £60 million of departmental savings over the three years have been identified as achievable. The extra £21 million is to be found through “further departmental savings”.

Where the government fits in

The July report says Southwark’s government grant is expected to fall by around £60 million over the three years of the new funding settlement. A government protection package, the Recovery Grant Guarantee, holds the council’s income at its 2025-26 level until 2028-29. The report says this “only defers the impact of reform”.

A separate answer on 23 September, from the Executive Member for Finance to a question by Councillor Richard Taylor, says the effects of the settlement “are expected to be felt most acutely from April 2027 onwards”.

This year is already overspent

The gap is about future years. The current year has its own problem.

The council’s month four budget monitoring report, taken by the Executive on 15 September, forecasts a £40.8 million overspend on the General Fund in 2026-27. That is up from £34.3 million in July.

The largest overspends by department are:

• housing, £16.2 million, almost all of it temporary accommodation
• children’s and adults’ services, £10.8 million
• the corporate transformation budget, £9 million
• resources, £3.3 million, mostly legal services

Temporary accommodation is forecast to cost £45.6 million against a budget of £29.5 million. The report puts nightly paid emergency rooms at about £86 a night. Leased homes run directly by the council cost about £52. There were 4,354 households in temporary accommodation in July, up from 4,265 in March.

The council has drawn on reserves to balance the books two years running: £5.3 million in 2024-25 and £25.3 million in 2025-26.

What it means for you

• Council tax. Southwark’s part of this year’s bill rose by 4.99%: 2.99% for general services and 2% for the adult social care precept, set in February. The breakdown already counts on £38.7 million of council tax growth over three years. Check your band on our Dulwich council tax bands page.
• You are being asked now. The council launched its budget consultation on 8 October. The details are in the next section.
• Savings proposals come next. The Executive has to set a balanced budget for 2027-28, where the gap is now £45.6 million. This year’s budget and council tax were set by Council Assembly in February, and savings proposals go through the Executive first.

How to have your say

The council launched its budget consultation on 8 October. It asks residents what matters most, where money could be better spent and how the council could raise more income. The council says views can be given through October and November. It has not published a closing date on the pages we read.

There are five ways to take part, according to the council’s budget challenge page:

• the online form
• a budget calculator, where you move sliders to protect services and see how the choices add up
• drop-in events, with no need to book
• your local councillor
• a postcard at libraries, leisure centres, family hubs and housing estate offices

The calculator covers the £425 million General Fund, which pays for most day-to-day services. Council housing and schools have separate budgets that cannot be used to close the gap.

Drop-in events

The council’s event list has twelve dates across the borough. These are the ones in and near Dulwich, Peckham and Camberwell:

The others are Southwark Heritage Centre and Walworth Library (15 October), Canada Water Library (20 October), John Harvard Library (2 November), Una Marson Library (3 November), Canada Water Leisure Centre (6 November) and The Castle Leisure Centre (14 November).

We will report the savings proposals when they are published.

Correction, 12 October 2026: this story first said this year’s council tax bill rose by 2.99%. Southwark’s part of the bill rose by 4.99%, made up of 2.99% for general services and 2% for the adult social care precept.