Charities in the London Borough of Hackney will lose more than £800,000 following council cuts as the local authority looks to remedy a £37m black hole in its finances.

Hackney Council said it would save £820,000 from the start of the 2025/26 financial year through cuts to its voluntary and community services grants programme – a loss of about one-third of its total value of £2.5m. 

The decision was announced at the local authority’s cabinet meeting on 28 October.

Hackney Council’s overall financial position report in August showed it was forecast to have an overspend of £37m after mitigations.

The main drivers for this overspend were rising demand and costs in the provision of temporary accommodation for homeless people and social care, the council said.

The local authority said this level of overspend presented a “major challenge” to its future financial sustainability.

This year’s grants programme has already awarded more than £750,000 in funding to 37 charities in Hackney.

Chris Kennedy, cabinet member for health, adult social care, voluntary sector and culture, and Joe Walker, deputy cabinet member for strengthening neighbourhoods, said in a joint statement: “In Hackney we are incredibly fortunate to have a vibrant voluntary and community sector made up of dedicated organisations, working tirelessly to support our communities.

“Everybody at Hackney Council acknowledges the contribution made by these organisations.

“It is with this appreciation in mind that I must be open about a difficult decision we have had to make.”

The councillors said rising costs, reduced funding from central government, and the growing demand for essential services had left the council with “no choice” but to make tough decisions.

“One of those is the need to reduce the grants we provide to voluntary and community organisations,” the statement said.

“While we are reducing funding, we remain committed to working with the voluntary sector in other ways. 

“We want to help organisations continue their critical work by helping them find new sources of funding, forming new partnerships, and offering advice and guidance during this transition.

“We also continue to support the sector in other ways, such as through our letting of commercial properties at reduced rates.”