Balanced on paper: Lambeth’s 2026/27 budget relies on £116m government support, £46m in savings and asset sales, as Greens seek Council Tax Support boost

Lambeth Full Council will meet on 4th March to set its budget for 2026/27, with the Labour administration presenting a plan it says puts the borough “on a path to financial sustainability” — but one that depends on £116 million of government support and nearly £47 million of savings next year alone.

On paper, the budget is balanced. In reality, it is balanced with significant help.

For 2026/27, the council must deliver £46.58 million of savings. Those savings sit alongside £68.3 million of growth and investment, much of which simply reflects inflation and rising demand in statutory services such as adult and children’s social care.

Council Tax will rise by 4.99 percent — the maximum allowed without triggering a referendum — taking a Band D bill to £1,536.60. That increase is made up of a 2.99 percent core rise and a 2 percent Adult Social Care precept.

The most significant financial intervention, however, is Exceptional Financial Support (EFS). Lambeth has secured agreement in principle for £116 million of capitalisation support from government covering 2024/25 through to 2026/27. This is not a grant. It allows the council to borrow, or to use capital receipts, to fund day-to-day spending.

Of that £116 million, £40 million is intended to rebuild the council’s general reserves from just £5 million to a target of £45 million. A further £16 million addresses historic bad debt issues.

Around £40 million covers overspends and one-off pressures, and £20 million is required simply to balance the 2026/27 budget. In other words, £20 million of next year’s balanced position depends directly on government intervention.

The Housing Revenue Account has already required emergency help. In 2025/26, £40 million of capitalisation was used to stabilise housing finances, reflecting long-term pressures including rent constraints, disrepair costs and an ageing stock.

The council is clear that EFS provides breathing space, not a permanent solution. To limit borrowing, Lambeth is pursuing an asset disposals programme aiming to generate between £50 million and £100 million in capital receipts.

These receipts would help reduce debt and fund the costs of restructuring and transformation. Where borrowing is used, it must be repaid over time through the council’s Minimum Revenue Provision, meaning today’s rescue measures will have consequences for future revenue budgets unless offset elsewhere.

The medium-term outlook remains challenging. While 2026/27 is technically balanced, the council forecasts budget gaps of £36.8 million in 2027/28, £25.6 million in 2028/29 and £67.3 million in 2029/30 — a cumulative shortfall approaching £130 million.

A key driver is the end of funding protections, which would see government funding fall sharply in 2029/30. The budget, in effect, stabilises the immediate position but leaves a significant cliff edge at the end of the decade.

Alongside Labour’s proposals, the Green Group has tabled a set of budget amendments. These do not replace the administration’s financial framework and leave the wider Medium-Term Financial Strategy — including the reliance on EFS — intact.

Instead, the Greens propose a relatively small redistribution within it, amounting to £1.46 million over three years.

The Green amendment focuses on shifting resources rather than reshaping the overall structure. It proposes reducing Special Responsibility Allowances paid to councillors, streamlining the Cabinet, removing “Policy Lead” roles and ending whip allowances.

It would also reduce Cabinet political support staffing and make a small additional reduction to the Human Resources and Organisational Development budget.

On the income side, the Greens propose introducing a parking surcharge for SUVs and increasing charges for households with multiple parking permits, framing these both as environmental measures and as revenue-raising tools.

The money generated would be directed primarily towards increasing Council Tax Support by £1.2 million, partially reversing changes to the scheme. Additional funds would go to frontline anti-poverty services, a furnished tenancy scheme and an empty homes campaign.

The council’s Section 151 Officer has confirmed the Green amendment is balanced in principle, though delivery would depend on detailed implementation and timing. Importantly, the amendment leaves Labour’s wider savings programme, asset sales strategy and £116 million support package unchanged.

The clearest difference between the two approaches lies in Council Tax Support. Labour’s budget includes changes to the scheme as part of its overall savings framework, while the Greens would allocate additional funding to mitigate the impact on lower-income households.

Beyond that, the contrast is largely one of emphasis and scale. Labour’s budget is structural, involving major savings, organisational redesign and government-backed capitalisation.

The Green amendment is redistributive, targeting political costs and vehicle charges but not addressing the projected £67 million gap in 2029/30.

Full Council will debate both proposals on 4th March. The Liberal Democrat Group’s budget amendments have yet to be published.