Southwark’s budget challenge – how would you save £102 million

About the figures and options in this online budget exercise 

The budget engagement tool is designed to help residents explore the choices involved in setting the council’s budget. 

The savings options are illustrative. They show the approximate scale of the choices facing the council and their potential consequences rather than fully developed proposals or the exact savings that would appear in a formal budget report. Any changes to services would require more detailed financial and impact analysis, appropriate consultation and formal decision-making.

Calculating the £102 million savings target over three years 

The council currently estimates that it will need to identify £101.9 million of savings from its net General Fund budget over the three financial years from 2027/28 to 2029/30. This is the forecast difference between the funding the council expects to have available and the amount it expects to spend on maintaining services and meeting its other commitments. For simplicity, the forecast funding gap has been rounded to £102 million throughout the budget engagement exercise. 

The forecast takes account of a range of factors, including inflation, increasing demand for services, changes in government funding and expected growth in council tax and business rates income.  

The scope and focus of the budget tool 

The budget tool and the wider engagement exercise focus on the council’s General Fund. The General Fund pays for most day-to-day council services, including social care, waste collection, parks, libraries, community safety and support for residents and businesses. 

It is separate from budgets that can be used only for specific purposes, such as council housing and schools. These include the Housing Revenue Account and the Dedicated Schools Grant. Funding within these budgets is restricted and cannot be used to help close the forecast funding gap in the General Fund. 

The starting point for the budget tool is the council’s £424.86 million net General Fund budget for 2026/27. This is the net budget recorded in the council’s financial management system and used to monitor spending during the year. A service’s net budget is the amount remaining after relevant service income has been deducted from its expenditure. This income may include fees and charges, contributions and grants provided for a particular service or purpose. The net General Fund budget therefore represents the amount that must be financed from the council’s general resources, including council tax, retained business rates and general government funding. 

The themes used in the budget tool 

The council’s net General Fund budget lines for 2026/27 have been grouped into ten themes for the purposes of the budget tool. The amount allocated to each theme, and its percentage of the total budget included in the tool, is shown below. 

Helping older people, disabled residents and carers get the right support, £120,914,712. 28.5% 

Helping children, young people and families get the right support, £83,250,355. 19.6% 

Supporting education and young people, £30,615,870. 7.2% 

Tackling homelessness and improving housing standards, £38,216,834. 9.0% 

Waste, recycling and clean streets, £38,312,082. 9.0% 

Roads, pavements and transport, £30,886,587. 7.3% 

Libraries, parks, leisure, community spaces and culture, £31,264,046. 7.4% 

Improving neighbourhoods, the local economy and skills, £2,610,002. 0.6% 

Climate, community safety and protecting residents, £21,613,604. 5.1% 

Funding essential council commitments, £27,172,300. 6.4% 

Total £424,856,391. 100% 

Some themes are divided into subcategories in the budget tool. This gives residents a further opportunity to explore their preferences and indicate whether different parts of a theme should be treated differently.  

Helping older people, disabled residents and carers get the right support

• Social care for older people £44,609,966  
• All age services £76,304,745  

Libraries, parks, leisure, community spaces and culture 

• Parks and open spaces £15,108,151  
• Libraries, leisure and culture £16,155,895 

Improving neighbourhoods, the local economy and skills 

• Employment and skills £1,773,451  
• Planning and building control £836,551 

Climate, community safety and protecting residents 

• Climate change and protection £912,900 
• Community safety, licensing and public protection £20,700,704  

Balancing the budget within the tool 

Residents are asked to make reductions across different budget themes to balance the budget. The council estimates that it will need to find £102 million of savings from its net General Fund budget by 2029/30. This is equivalent to approximately 24% of the council’s current net General Fund budget of £424.86 million. This £102 million savings requirement forms the basis of the tool. 

The amount currently spent on each budget theme and service varies considerably. As a result, the same percentage reduction can produce very different levels of savings. For example, a 10% reduction to a larger budget would contribute more towards closing the funding gap than a 10% reduction to a smaller budget. 

The tool also allows residents to change two important sources of income that support the General Fund - council tax and fees and charges. Further increasing fees and charges would reduce the savings required from services, while reducing council tax would mean that additional savings or other sources of funding would need to be found. 

Council tax 

The government’s funding arrangements assume that the council will increase council tax by 4.99% in each of the next three years. This consists of a 2.99% general increase and a 2% adult social care precept, which provides additional funding for adult social care. 

The council is not required to increase council tax by 4.99%. However, the government assumes that councils will make use of the increases available to them when assessing the funding they have available. If the council chose a lower increase, it would receive less council tax income, increasing the amount of savings or other funding that would need to be found elsewhere. 

The tool allows residents to reduce the assumed council tax increase, from 4.99% to as low as 0%, for one year. Because each year’s council tax is based on the previous year’s level, choosing a lower increase in one year would also reduce the amount of council tax collected in future years. 

For example, increasing council tax by 4% rather than 4.99% for one year would result in around £1.5 million less income in the first year. Freezing council tax for one year, rather than increasing it by 4.99%, would result in around £7.7 million less income in the first year. The decision would also affect income in later years because future council tax increases would start from the lower level. Less council tax income would mean that additional savings or other sources of funding would need to be found to balance the budget. 

Under the current rules, the council cannot increase council tax by 5% or more without securing residents’ approval through a local referendum. The tool therefore does not include an increase of 5% or more as a budget option.  

Fees and charges 

The council charges for some services, such as planning applications and the use of certain facilities. Some charges are set nationally, while the council has discretion over how much to charge for others. For 2026/27, nationally set charges increased by the amount required by law. Most fees and charges controlled by the council increased by 5%. This was higher than inflation at the time the decision was made, helping the council raise additional income and reduce the savings required from services. In future years, the council could choose to increase its discretionary fees and charges by more or less than 5%. 

The budget tool allows residents to increase charges relative to a 5% annual increase for one year. Because each year’s fees and charges are based on the previous year’s level, a change made in one year would also affect the amount of income the council receives in future years. For example, increasing fees and charges by 25% rather than 5% in one year would generate around £9.0 million of additional income in the first year. These examples show the estimated impact in the first year. The decision would also affect income in later years because future increases would start from the new, higher level of charges. The financial estimates in the budget tool also assume that changing prices would not significantly affect demand. In practice, higher charges could reduce use and generate less income than estimated. 

Use of financial, service and performance data 

The council’s budget tool, and the broader budget challenge, includes a range of facts and figures on service demand, activity, performance and budgets. These are intended to help residents understand the context, scale and breadth of council services, and support more informed decisions when using the budget engagement tool to consider savings across different service areas. 

Financial data relates to the council’s 2026/27 net General Fund budget, unless otherwise stated. Service and performance data generally relates to the 2025/26 financial year, unless otherwise stated. Wherever possible, data has been drawn from published sources, including statistics produced from statutory returns to government, such as the Children in Need census, and information published on the council’s website. Where suitable published data is not available, council service areas have provided additional information on service activity, demand and performance for inclusion in the budget materials.