Lambeth’s reserves are running on empty – and the Quarterly bad news cycle shows no sign of slowing

Lambeth Council has released its Quarter 2 2025/26 Budget Monitoring Report, and once again the picture is bleak.

Updating these stories each quarter gets no easier: the headline categories for overspends remain the same, but the figures are only going one way – up.

The Council’s already-fragile reserves remain “significantly below recommended levels”, leaving Lambeth on the thinnest of financial ice.

Reserves are supposed to be the shock absorbers that keep key services running when budgets go off course. Lambeth’s shock absorbers are now so worn down that even a minor jolt threatens to destabilise the whole machine.

And the jolts keep coming.

Temporary accommodation costs continue to spiral, adult social care pressures show no sign of slowing, and children’s services remain stretched far beyond budgeted limits.

Lambeth claims spending has stabilised in some areas, but stabilised simply means “still very high, but not getting even higher quite as quickly as before.”

Behind the scenes, the Council is quietly hacking away at recruitment, holding vacancies open, and freezing posts to stop the overspend getting even worse.

Service cuts – the thing no administration ever wants to admit to in public – now look inevitable. Something has to give. And when it gives, it won’t be senior management salaries or consultant invoices that feel the first hit.

It will be residents.

The Council hints that more Exceptional Financial Support from Government may be needed, on top of the £40m bailout already propping up the Housing Revenue Account.

Lambeth plans to plug future gaps through “asset disposals”, which is another way of saying “selling things we own because we’ve run out of other options”.

But the deeper problem is one that no set of quarterly savings proposals can fix: local government funding in England is broken.

Lambeth now has £116m less each year in real terms than it would have had without a decade of cuts. Yet demand – homelessness, safeguarding, adult social care – keeps rising.

Here’s the twist, though. The Minister now responsible for fixing this mess is none other than Steve Reed, MP for Streatham and Croydon North, and the man overseeing local government finances in a borough he represented as Council Leader.

It’s almost as if he’s blind to what’s taking place on his own Lambeth doorstep.

Can Lambeth Labour’s pals in central government really bail out their own failing Council?

And if they do, how long will such bailouts last before the entire model collapses under the weight of demand no borough can meet?

The truth is that Lambeth is trying to patch things up, desperately and quietly. But the numbers don’t lie: reserves are running out, costs are rising, and the quarterly bad-news cycle shows no sign of ending.

Without a new funding model for local government, Lambeth’s financial position won’t just remain unsustainable – it will become unmanageable.

And that’s when the real cuts begin.