London Borough of Lambeth – Progress Review

The council undertook an LGA Corporate Peer Challenge (CPC) between 5-8 November 2024 and promptly published the full report with an action plan. 

The Progress Review is an integral part of the Corporate Peer Challenge process. Taking place approximately ten months after the CPC, it is designed to provide space for the council’s senior leadership to:

• Receive feedback from peers on the early progress made by the council against the CPC recommendations and the council’s RAG rated CPC Action Plan.
• Consider peers’ reflections on any new opportunities or challenges that may have arisen since the peer team were ‘on-site’ including any further support needs.
• Discuss any early impact or learning from the progress made to date. 

The LGA would like to thank Lambeth for their commitment to sector led improvement. This Progress Review was the next step in an ongoing, open and close relationship that the council has with LGA sector support.

The Progress Review at Lambeth took place (onsite) on Tuesday 9 September 2025. 

The Progress Review focussed on the recommendations from the Corporate Peer Challenge, under the following theme headings: 

• financial sustainability
• One Lambeth Transformation
• social and climate justice
• governance and member development.

For this Progress Review, the following members of the original CPC team were involved: 

• Stephen Evans, Chief Executive, Royal Borough of Windsor and Maidenhead
• Councillor Shantanu Rajawat, Leader, London Borough of Hounslow
• David Hodgkinson, Director of Resources, Westmorland and Furness Council
• Sajda Nawaz-Bhatti, Head of Policy, Newcastle City Council
• Ama Goulden, Programme Manager, LGA Shadow Peer
• Ellie Greenwood, Peer Challenge Manager, Local Government Association.

Out of the CPC’s nine recommendations, sub-divided into 30 separate actions, the council’s RAG rated action plan reports that 60 per cent of actions (18) are completed or on schedule for completion, 36.7 per cent (11) are at risk of failure to deliver to schedule, and 3.3 per cent (1) will not be on schedule. Although this seems like a high proportion of actions in the amber category, a number of these actions relate to medium- or long-term actions on financial sustainability and transformation, where it is clear significant activity is being progressed. In others, the council has specifically amended the plans and timetable of the original action plan to reflect the new strategic direction on these issues following senior officer recruitment at Lambeth.

As a peer team we were pleased to see that the council had adopted a significant number of our specific recommendations, for example, an external review of scrutiny, and strengthening the Corporate Committee through recruiting to the vacant independent member role. The council is clearly making progress in delivering against many of the recommendations and detailed action plan. We perceived a noticeable change in the council since November’s peer challenge, with a much tighter grip on tackling the council’s significant financial challenges. Both members and staff highlighted this point, with a clear sense that there is greater organisational awareness of the need to do so. We felt that the council is now in a stronger position to take the steps that it needs to. 

Key to this is the political direction set by the leader and cabinet in showing willingness to tackle the council’s significant budget challenge by giving a clear message that all options should be considered when it comes to budget proposals and that tough decisions will be needed. This is supplemented by the widely recognised, positive and immediate impact of the new chief executive (in post since March 2025) and section 151 officer (in post since December 2024). The council’s challenge, though, is that the scale of the savings required is large and the time to achieve service transformation before a potential general fund ‘cliff edge’ is reached is very tight. 

Since the peer challenge, the council has received an encouraging report from Ofsted following a focused visit in children’s services, with further work to do to ensure all children in need of help and protection receive a consistent, timely and effective service. The Lambeth Strategic Partnership has further developed into an effective convening forum that can galvanise action in support of shared priorities, with the development and recent publication of the Lambeth Growth Plan a good example of this. The Lambeth Climate Partnership has expanded and the Lambeth HEART (Health Determinants Research Collaboration) is being embedded in the council. In the week of our visit, Lambeth was confirmed as one of forty-three first wave areas for the Government’s neighbourhood health service approach, building on its strong foundation of joint NHS and council working.

While the peer team saw a lot of positive progress at the council, it was also clear that the financial risks facing the council remain extremely stark. A combination of ongoing demand pressures, high debt servicing and provision and rapidly reducing reserves, compounded by the likely impact on Lambeth of the fair funding changes, have increased the financial challenge since the CPC. The council needs to make huge savings in a very short space of time, which represents a significant risk.

There is good evidence both of greater organisational awareness of the scale of the challenge and that Lambeth is taking the right steps to tackle its financial challenges; examples include spending controls and panels, external reviews of the HRA, capital programme and high demand / cost areas, and an organisational restructure and reset of the transformation programme. 

The council should maintain and accelerate this work, with the senior leadership team restructure concluded and implemented quickly and the section 151 officer and resources directorate given the corporate support and resources needed to enable delivery of the necessary changes. This should be supplemented by strong governance mechanisms, including ongoing strengthened golden triangle oversight, and rigorous engagement with / oversight of external audit opinions and CIPFA recommendations.

Although the council is working at pace to strengthen its financial governance, restructure and transform, transformation and culture change take time. The question for Lambeth is whether its programmes can deliver quickly enough; given the severity of the financial pressures, time may not be on its side and there is a worst-case scenario where the council is unable to set a balanced budget before the impact of its programmes is felt financially.

Given the amount of financial risk and the timescales involved, alongside pursuing change at pace, we urge the council to continue to engage closely with Government - and be prepared to ramp up this engagement over the coming months - to outline the risks it is facing and explore the potential for assistance to set a balanced budget in 2026/27 and over the medium-term. This is likely to be in the form of Exceptional Financial Support (EFS) which, whilst far from ideal, is the only ‘safety net’ currently on offer to councils in acute financial trouble. This will provide the option of a backstop that protects the council in the short term while it delivers the transformation and savings required to balance its budget in future years.

More detailed feedback on each thematic area is set out below. 

• Recommendation 1: Work quickly to provide clarity on the full revenue implications of the HRA and the winding down of Homes for Lambeth.
• Recommendation 2: Take a collective and transparent approach to the organisation’s financial challenges; building on difficult decisions taken already, go further and faster on savings and transformation and consider all options in the ongoing discussions with Government.  

Feedback

There is evidence of good progress being made in key areas of financial management and governance. The peer team observed a considerably greater grip on the council’s financial position and greater organisational, ‘every day’ awareness of the scale of the challenges than during the CPC, prompted by the recruitment of the new CEO and S151 officer and a transparent relationship with cabinet and colleagues about what is required. 

The council has introduced a recruitment freeze, ended all non-essential spending and put in place a spending control panel chaired by the section 151 officer. A new Finance and Transformation Board meets fortnightly to oversee savings and spending decisions, with a detailed savings tracker rolled out and monitored monthly alongside monthly budget monitoring reports. The cabinet member for finance attends all cabinet member briefings to ensure the financial position is reflected, and budget challenge sessions with members will take place in Autumn. The cabinet and senior leadership team have been clear that no decisions are off the table, however difficult.

The council has commissioned an independent external review of the future options available with regards to Homes for Lambeth and commissioned external expertise to review the Housing Revenue Account business plan. The capital programme has been paused pending the outcome of a comprehensive review. External consultants have been engaged to identify and support the deliverability of savings and spend reductions in high demand areas and strengthen early intervention and prevention, while external support has been commissioned to benchmark Lambeth’s costs against comparable councils.’

An organisational and senior leadership restructure was underway during our visit, with the previous seven directorates being reduced to five and a twenty per cent reduction in the number of Corporate Director / Director level posts: the new structure subsequently went live on 1 October. 

The council should maintain and accelerate the work it has already done to improve governance, transparency and financial management grip, supporting the section 151 officer and strengthened resources directorate to develop a clear organisational financial transformation plan that can deliver at pace.

It should also further strengthen officer and political oversight by continuing regular consideration of the financial position at the golden triangle meetings between the CEO, S151 officer and monitoring officer and formalised monthly reporting to cabinet. Responding to and building on recommendations from the external auditor and CIPFA will enhance assurance, and the council should continue to utilise independent financial reviews and challenge where appropriate.

However, despite the significant work that is ongoing, the financial position for Lambeth remains extremely precarious, with huge savings required and little time to deliver them. This leaves the council at risk of reaching a financial ‘cliff edge’. The council overspent its 2024/25 budget by £60.493m due to demand pressures (particularly in temporary accommodation) and newly identified debt servicing and debt provisions. General fund reserves reduced from £123.7m at the end of 2023/24 to £55.7m at the end of 2024/25, of which just £5m are not earmarked.

The February 2025 MTFS position was adjusted in July 2025 to take account of these pressures as well as Fair Funding estimates of a £45m funding reduction across 2026/27, 2027/28 and 2028/29, based on London Councils analysis. The revised budget gap for 2026/27 is £49.9m with a £84.3m gap to 2030 (the council has budgeted to make £46.3m savings in 2025/26). Month one reporting for 2025/26 indicated an £18m overspend. A key consideration for the council will be whether the financial position deteriorates during quarters one and two and whether the external audit of accounts for 2024/25 reveals any unexpected liabilities. Newly reported monitoring for quarter one following the progress review visit indicates a net overspend of £20.38m before management action. The largest overspends are c. £20m in housing services, £8m in adult social care, a £14m overspend relating to debt financing costs and a £6m overspend across children’s, families and education. These are offset in part by £27.5m of budget held corporately for demand-related risks.

Given the current progress of savings identification and delivery, improved transparency and governance and other improvements, the council is hopeful of meeting its financial challenges. However, given the level of financial risk, alongside pursuing change at pace we urge the council to continue to engage closely with Government - and be prepared to ramp up this engagement over the coming months - to ensure it has the backstop of EFS in place should its plans not deliver the savings required in the very short timescale available. This will enable it to protect itself in the worst-case scenario that it cannot balance its budget in the short term. EFS is a far from an ideal response from government but it is the only ‘backstop’ on offer. Early engagement with government is key and if it turns out the council does not need it, it does not need to draw it down.

The council faces further financial pressures on its Housing Revenue Account (HRA). At the end of 2024/25, HRA reserves stood at £14 million with just a small sum unallocated; with the council’s initial January 2025 estimate forecasting a £25 million overspend for 2025/26, it sought £40 million of exceptional financial support for its HRA in 2025/26. The Government agreed in February 2025 to provide the £40 million as in-principle capitalisation support. The council has subsequently engaged external expertise for a review of its HRA.

• Recommendation 3: Maintain pace on developing the One Lambeth transformation approach and work to clarify roles and responsibilities across the corporate centre and services.
• Recommendation 4: Be clear on how the organisation needs to change and what that means for services and organisational structure, working towards a new target operating model. The council should use this as an opportunity to take members, staff, partners and residents with it in creating a vision for the future of the organisation.
• Recommendation 9: Continue to embed significant progress made in strengthening organisational culture. 

Feedback

An organisational restructure was underway at the time of our visit, focused on the top two management tiers of the organisation. We share the view that the reduction from seven to five directorates will bring greater clarity about the role of the corporate centre and services (one of the CPC recommendations), as well as achieving important cost savings. 

Clearly, this is a challenging time for staff, with some services / teams moving directorates and uncertainty at this stage about the future implications for other roles. However, overall, we heard a largely supported view that the process, although uncomfortable, has been well managed. The chief executive sends weekly updates to staff, with more than 1,000 staff attending One Lambeth Roundtables and question and answer sessions. The council should continue to quickly progress the restructure, being mindful of the need to support staff wellbeing throughout a difficult process.

On the wider transformation programme, the council is working at pace following the appointment of the new chief executive, with a full transformation plan expected by the end of the financial year.  To support this, the council should ensure it has core basics in place, including a programme management office and consistent approaches to business case governance, alongside the new corporate savings trackers. This should enable transformation which is service-led but supported by the corporate centre.

We heard about good joint working between directorate management teams in housing, adults and children’s services to ensure alignment across projects. The council should continue work to break down silos between these services, complemented by the work of external consultants (see next section) and by a review of council policies in key areas such as housing and social care, to support the dual ambition of organisational transformation and financial sustainability. We were also impressed by the council’s current review of assets, intended to provide a framework to inform decisions about which assets to retain and which to dispose of in a strategic way.

A communications and engagement plan for staff on transformation and financial sustainability is being finalised and will be delivered from Autumn. This provides an opportunity to provide a positive narrative about what transformation means for staff, residents and partners, and the potential benefits of new ways of working, rather than focusing on financial cuts alone. Workshops and engagement sessions will allow staff to input into different themes, with the aim of creating a shared vision for the future of the organisation and understanding about what needs to change.

It was encouraging to hear that partners too are keen to engage in mature conversations about how they can help the council respond to the financial challenge, recognising an opportunity to identify how things can be done differently and similarly recommending a narrative about how the changes can benefit communities and partners as well as reducing costs. With the Lambeth Strategic Partnership in its infancy at the time of the CPC, we were pleased to hear that partners feel this is evolving into an effective forum that convenes local partners to undertake coordinated and focused activity in different areas. A Voluntary and Community Sector Forum has also been established and met twice, providing a consistent way for the sector to come together and the council to communicate with it.

• Recommendation 5: Building on the success of health integration and broader partnership working, consider how you integrate people focused services to manage demand more effectively and drive improvements in resident experience.
• Recommendation 8: Maintain strong leadership on climate justice but prioritise the actions that will have the greatest impact on climate change and net zero and ensure costs are reflected in the Medium-Term Financial Strategy.

Feedback

As noted above, external consultants have recently been engaged to identify savings in high demand areas and data led approaches for early intervention and preventative working. Responsible officers in key areas have been identified to help identify opportunities to act earlier to support residents and avoid later, more complex and costly interventions. This work will need to move quickly, supported by close working across the new organisational structure and any necessary reviews of council policies.

In the week of the progress review, Lambeth, LB Southwark and their local health partners were announced as one of 43 pilot areas for the National Neighbourhood Health Implementation Programme following a competitive bidding process. The successful bid reflects the existing strong partnership working on the Lambeth Together partnership, which is focused on developing neighbourhood working to support individuals with complex needs, building on the existing Thriving Communities programme. The Lambeth HEART programme, in its early stages at the time of the peer challenge, is being more closely linked with the council’s organisational priorities, with a focus on funding research into both temporary accommodation and social care.

A major development since the peer challenge is the development of the Lambeth Growth Plan, developed in collaboration with partners and with synergies to both the London Growth Plan and NHS ten-year plan. The Plan recognises the key role of partners and what they are doing in delivering local growth; partners spoke positively about how the council’s engagement (including through the Lambeth Strategic Partnership) ensured their input into a key strategic document and its recommendations.

On climate change, we were pleased that the council has responded to several of the recommendations in the CPC report. The council’s emissions reports are being published in a timelier way, with the 2023/24 emissions report already released and the 2024/25 due for publication in the second quarter of 2025/26. The council made a partial submission to the Carbon Disclosure Project for 2023/24, with preparation underway for a submission in 2025.

The council is also strengthening expectations of its highest value suppliers regarding carbon emissions, with clearer templates and guidance, and - as we recommended - is taking a targeted approach to key suppliers. Work is underway to refine the approach to integrating climate considerations into wider council work, with the next Climate Board meeting focusing on how to champion the agenda through staff training, communications and reporting requirements.

Finally, the Lambeth Climate Partnership has also expanded to include an additional 43 businesses and organisations.

• Recommendation 6: Ensure the improved governance put in place to oversee improvement in children’s services and housing is replicated in corporate committees – consider external representation on your Housing Improvement Board and a Centre for Governance and Scrutiny review of scrutiny.
• Recommendation 7: Refresh the member development offer to support members and committee to deliver their roles in increasingly challenging circumstances. 

Feedback

The council has proactively addressed the recommendations and comments on governance from the CPC report.

An external CIPFA review of the Corporate Committee has taken place; recommendations included tightening the remit of the Committee and prioritising its work programme. It is also positive that the council has recruited to the vacant independent member position on the Committee – it should now explore recruiting a second independent member, in line with CIPFA recommended practice. A review of the Housing Improvement Board concluded it is not appropriate at this time to have an external representative on the Board but refreshed its terms of reference and focus as the renamed Housing Assurance Board.

Following the review of the Corporate Committee, CIPFA has now commenced a review of scrutiny at the council; the review can help the council to sharpen scrutiny outcomes and recommendations.

At the time of the peer challenge, we heard some uncertainty among non-executive members about how they should engage with senior officers. The council has subsequently taken steps to systemise this, with additional routes to engage with cabinet members and senior officers. The opposition meet monthly with the chief executive, and there are regular meetings between democratic services and the opposition (to date, Liberal Democrat councillors but in future Green councillors too) to provide an opportunity to raise concerns.

On member development, training sessions on scrutiny and for chairs have been held, with an LGA-run budget scrutiny session planned for November ahead of the budget being considered at overview and scrutiny in December. Work is ongoing to prepare the member induction programme for the May 2026 councillor cohort, with a cross-party working group exploring new approaches to training, for example 30-minute training sessions and sessions focusing on big ticket items (such as the Waterloo masterplan) as well as councillor skills.

The council has launched a review of the constitution, led by the monitoring officer and section 151 officer, with the aim of ensuring the constitution, governance structures and schemes of delegation are up to date by the time of the May elections.

On audit and assurance, there is regular contact between the chief executive, section 151 officer and leader with the council’s external auditor. An Assurance Board has been created in addition to regular statutory officer meetings, with a ‘golden square’ approach bringing in the external auditor too.

The CPC report suggested that Lambeth consider reporting on progress against previous governance actions and outlining future actions in the Annual Governance Statement. The council has taken steps to strengthen the AGS with a redesigned format including an annual action plan on areas for improvement in governance, informed by a Directors Assurance Questionnaire – reflecting a positive and strengthened culture of governance and compliance.

The LGA would like to thank Lambeth for undertaking an LGA CPC Progress Review. 

We appreciate that senior managerial and political leadership will want to reflect on these findings and suggestions in order to determine how the organisation wishes to take things forward.

Under the umbrella of LGA sector-led improvement, there is an on-going offer of support to councils. The LGA is well placed to provide additional support, advice and guidance on a number of the areas identified for development and improvement and we would be happy to discuss this. 

Mona Sehgal (Principal Adviser) is the main point of contact between the authority and the Local Government Association (LGA) ([email protected]) supported by Kevin Kewin, Senior Regional Adviser ([email protected]).