Major London council set for 19 million overspend

"The culture that we have embedded and that we need to embed is that you cannot live beyond your means. You can't live on credit cards, you can't live on handouts. You need to live on the income that you have and the grants you have you can't live beyond that. However Rahman added that the council did not need extra financial support from the government, which other local authorities are seeking."

"The figure was revealed in an assessment of the council's spending in the first half of the 2025/26 financial year. It marked a 4 million increase from the 14.7 million overspend previously predicted in September. Papers presented to the cabinet say the overspend is driven by demand for social care services and temporary accommodation for families facing homelessnes. Councils have to provide those services by law. But increasing demand for them, coupled with inflation, mean councils across the country are facing financial crises."

Tower Hamlets council is projecting a near £19 million overspend for the first half of 2025/26, up from a previously predicted £14.7 million. The overspend is driven by rising demand for social care services and temporary accommodation for families facing homelessness, services that councils must provide by law. Increasing demand combined with inflation is straining council budgets nationwide, with the government expecting up to 74 councils to seek exceptional financial support next year. Local finance leaders report similar pressures across London and say council managers are implementing measures such as weekly review panels on temporary accommodation, adult social care and special educational needs to reduce spending.

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