Lewisham Council’s projected budget overspend has reduced by nearly £20 million since June.  

In early summer, the council estimated it would overspend by £25.6 million in the wake of the Covid-19 pandemic.  

But its latest financial monitoring report, as of August 31 but updated to the end of October 2020, estimates an overspend of £6.7 million. 

The latest figure follows more than £5 million of in-year savings and Government funding of £35.3 million for Covid-19 – it does not include costs linked to the second wave of coronavirus or the second national lockdown.  

But according to the report: “It is important to note that although not entirely captured in this report, the full extent of the council’s costs as a result of the coronavirus pandemic, including the losses on sales, fees and charges, losses on collection fund income and the potential second wave costs, go way beyond the existing resources provided by Government to date.  

“In addition to the Covid-related service pressures and loss of income, the council is also forecasting losses on its collection fund of over £20 million.” 

The report also shows that more than £6.7 million in cuts due to be applied this year are at risk or have not been achieved.  

It comes at the same time as Lewisham set out its draft budget cuts – nearly £27 million in possible cuts have been identified out of £40 million planned over the next three years.     

Asked by the local democracy service whether he believed the proposals would be achieved after millions in cuts haven’t been this year, Lewisham’s mayor Damien Egan said “it’s critical” that the council sets a balance budget.  

“It’s really difficult – [it’s] happened before where cuts have been put forward and then, over months and years, sometimes you find there are some unintended consequences, you decide not to go forward with something, or something changes.  

“And it’s even less predictable now with Covid. But the budget that we’re putting forward and the cuts that we want to take forward, we want to ensure that they can all be actually achieved because it’s critical that we set a balanced budget,” he said.  

The forecasted overspend is split between a Covid-related underspend of £3.7 million and a non Covid-19 overspend of £10.4 million, most of which relates to pressures on children’s social care.  

The service is trying to save money through better tracking of child placements costs, reducing high-cost placements, monthly reviews of budget areas where spend is high, reducing agency staff, and reviewing all contracts.  

As well as children’s social care, Lewisham is expecting overspends from schools, adult social care services, public health, and the leisure management budget. 

Lewisham’s new two-year leisure contract with Greenwich Leisure Limited (GLL) cost £1.4 million.  

The council cut ties with Fusion Lifestyle over the summer in the wake of “significant financial challenges” caused by lockdown, but also “very negative feedback” from residents.  

The new contract has significantly added to the leisure service’s spend, which is expected to go over by £2.1 million.  

The Dedicated Schools Grant (DSG) is currently projected to overspend by between £2.6 million and £4 million at the end of the financial year – there are five schools with loans totalling £1.4 million. 

The monitoring report is set to go before mayor and cabinet on Wednesday (November 11).