Richmond Council finances under strain as reserves face four-year countdown

Richmond Council finances are entering a critical phase, with £52 million in reserves at risk of running out within four years as government funding changes take effect. The Finance, Policy and Resources Committee heard yesterday that even maximum council tax increases would leave a funding gap of £19. 3 million in 2026/28, rising to £30. 8 million by 2026/31. The numbers translate to difficult choices ahead about the services you rely on, from libraries and parks to social care and road maintenance.

The warning came as councillors reviewed financial projections showing reserves falling from £52 million to £28 million by the end of this financial year.

Where the pressure is coming from

Government funding changes are the main driver.

The council faces a combination of reduced central government support and restrictions on how much it can raise through council tax. Even with the maximum permitted increase, the gap between income and spending continues to widen. Social care costs, which the council must provide by law, are rising faster than available funding. Demand for children’s services, adult social care, and temporary housing support has grown while the money to pay for them has not kept pace. The council is legally required to provide certain services regardless of budget constraints, which means discretionary services face the sharpest pressure.

The structural problem is that Richmond's funding model depends on reserves that were built up over years of careful management but are now being drawn down at an unsustainable rate.

What services could be affected

Statutory services receive protection first.

By law, the council must continue providing social care for vulnerable adults and children, along with waste collection and certain public health functions. That means libraries, community centres, parks maintenance, road repairs, and local events budgets are more vulnerable when savings need to be found. The council has not yet specified which services might be reduced or cut, but the size of the funding gap suggests cuts to discretionary services alone will not be sufficient. Staff reductions, asset sales, and service redesigns are all likely to be considered. Previous budget rounds have seen reductions in youth services, community grants, and cultural programmes.

The pattern from other councils facing similar pressures suggests a shift toward reduced opening hours, fewer face-to-face services, and more reliance on digital channels.

How we got here

Start of 2026/27 financial year

Reserves stood at £52 million

25 September 2026

Finance Committee warned reserves could fall to £28 million by end of financial year

2026/28 financial year

Projected funding gap of £19. 3 million even with maximum council tax rise

2026/31 financial year

Projected funding gap reaches £30. 8 million; reserves could be exhausted

Councillor Gareth Roberts, who leads on finance, presented the figures to the committee. The report he shared showed that reserves built up through years of careful budget management are now being drawn down at a rate that could see them exhausted within the current electoral cycle. His warning to fellow councillors was clear: without significant government funding changes or difficult local decisions, the council’s financial position becomes unsustainable before the next local elections.

How Richmond compares to neighbouring boroughs

Richmond is not alone in this position.

Kingston, Hounslow, and Wandsworth councils have all reported similar funding pressures, with reserves declining and gaps between spending and income widening. Richmond’s reserves of £52 million at the start of 2026/27 represent roughly 20 per cent of its annual budget, which is considered a prudent level but leaves little room for unexpected costs or further government cuts. Some London boroughs have already issued Section 114 notices, effectively declaring themselves unable to balance their budgets, though Richmond has not reached that point. The council’s relatively strong financial management in previous years has bought time, but has not solved the underlying funding problem.

The difference between councils now is less about whether they face pressure and more about how long their reserves can sustain them.

What this means for you

Your council tax is almost certain to rise by the maximum permitted amount, which the government sets each year. For a Band D property, that typically means an increase of around £70 to £100 annually, though the exact figure for 2026/28 has not been confirmed. Budget consultations will run in early 2026, likely January or February, and you can submit your views through the council’s website or attend public meetings. Focus your input on specific services you use or value, as general objections to cuts carry less weight than detailed evidence of impact. If you rely on particular council services such as day centres, community transport, or specific library branches, now is the time to document how you use them and what alternatives you would face if they were reduced. The council is required to consider responses to consultations, and services with strong, evidence-based support have better chances of protection. Watch for notices about asset reviews too, as the council may consider selling buildings or land to raise funds, which could affect community spaces you use.

The financial pressure on Richmond Council is real and growing, with reserves that could run out within four years even with maximum tax rises. Your opportunity to influence where cuts fall comes through budget consultations in the new year, where specific, evidence-based input about services you rely on carries the most weight.

The timing matters because budget consultations typically run in January and February, giving you a narrow window to make your priorities heard before decisions are set for the April financial year.

Frequently asked questions

How much will my council tax go up?

The exact figure for 2026/28 has not been set yet, but the council is expected to apply the maximum increase the government permits. In recent years, that has been around 2. 99 per cent for the main council tax rate, which for a Band D property translates to roughly £70 to £100 per year. You will receive confirmation of the exact amount in your council tax bill for the new financial year starting in April.

Which council services are most at risk?

The council must by law continue providing social care for vulnerable adults and children, waste collection, and certain public health services. Discretionary services such as libraries, parks maintenance, community centres, road repairs beyond statutory minimums, and cultural programmes face greater pressure. The council has not yet specified which services will be cut, as that will be decided through the budget process and consultations in early 2026.

When can I have my say on the budget?

Budget consultations typically run in January and February, ahead of the council setting its budget in March for the financial year starting in April. The council is required to consult residents and will publish details of how to respond on its website, usually including online surveys, public meetings, and email submission options. Check the council’s website from December onwards for specific dates and consultation documents.

What happens if reserves run out completely?

If reserves are exhausted, the council would face extreme difficulty balancing its budget and could be forced to issue a Section 114 notice, which effectively bans all new spending except for statutory services. This would mean immediate and severe cuts to discretionary services, potential staff redundancies, and possible government intervention. Several councils across England have already reached this point, resulting in dramatic reductions in local services.

Why is Richmond affected when it is a relatively wealthy borough?

Government funding for councils is based on a complex formula that considers local needs and the ability to raise council tax, but does not fully account for the cost of providing services in expensive areas like Richmond. Social care costs are particularly high in London, and demand for services has grown while central government funding has not kept pace. Richmond’s relative wealth means it receives less government grant funding, but it still faces the same rising costs for statutory services, leaving less money for everything else.

Useful resources

• https://www.richmond.gov.uk/services/council_tax