Richmond warns reserves could run out as government funding cuts deepen financial pressure

Richmond Council is warning government funding changes could wipe out its financial reserves within the next few years.

A report discussed by the Finance, Policy and Resources Committee yesterday shows that reserves of £52 million at the start of 2026/27 could fall to £28 million by the end of the financial year.

These reserves could run out within the next four years.

Even if the government allowed the maximum Council Tax increase, Richmond would have a funding gap of £19.3 million in 2027/28, rising to £30.8 million by 2030/31. 

Councillor Gareth Roberts, Leader of Richmond Council, said: "We are being hammered by the government and are facing a monumental financial challenge.

"The government’s latest funding changes would mean our reserves could run out during the next few years. Reserves are there to manage risk and give councils breathing space, not to plug permanent gaps created by grossly unfair national funding decisions.

"We are reviewing spending, fast-tracking £39 million of savings and changing how services are delivered with an ambitious transformation programme so we can continue to protect residents, especially those who most need our support. But Richmond cannot absorb a cut of this scale without consequences."

The shortfall follows government reforms that would cut Richmond’s annual core funding by £29 million by 2028/29. This is around 58% of its core funding allocation and the largest percentage cut in London. 

The Council has launched a consultation asking residents to back a formal proposal calling on the government to rethink the plans under the Sustainable Communities Act. This legislation allows councils to seek changes to laws, policies or other barriers affecting their communities.

The consultation asks residents to consider three key changes:

• Rethink of the proposed funding allocations
• An extended transition period in line with previous funding reviews
• A greater share of locally generated income for councils

Councillor Jim Millard, Deputy Leader and Lead Member for Finance and Resources, said: "We are doing everything we can to manage this challenge, but the figures are stark. Without a fairer funding deal, services for residents will suffer.

"That is why it is crucial that everyone in the borough helps us make our case as strongly as possible and forces the government to think again and stop punishing Richmond."

A separate capital programme review paper also discussed during the meeting shows the council will have to keep major investment plans under close review, with a revised six-year programme of £233.9 million and a potential borrowing requirement of £124.7 million.

The report says existing approved schemes will be reviewed in the coming months to ensure they remain affordable, with priority given to projects that can deliver annual revenue savings.