London boroughs are grappling with enormous financial pressures. With the government preparing its upcoming Spending Review, and with funding reforms promised promised in 2026/27, London Councils is making the case for restoring stability to town hall finances. This would put boroughs in a much stronger position to deliver services and drive economic growth across the capital.

Our shorth video below sets out the perfect storm facing borough finances – including more than a decade of structural underfunding, rising demand for services, and new responsibilities placed on councils by central government - and what needs to be done to restore stability to local government finances.

London’s worsening homelessness emergency represents the “single biggest risk” to boroughs’ finances and is pushing town halls towards bankruptcy, London Councils has warned.

Analysis from the cross-party group estimates that skyrocketing numbers of homeless Londoners needing a roof over their heads and spiralling temporary accommodation costs mean boroughs in the capital were forced to overspend on their homelessness budgets by at least £330m in 2024-25. This represents a 60% increase on their original homelessness budget plans for the year.

London Councils’ Executive Member for Housing & Regeneration, Cllr Grace Williams, said: “Homelessness spending is fundamentally driven by factors outside our control. Boroughs have a legal duty to provide homelessness support – and we’re seeing homelessness numbers skyrocket while accommodation costs spiral.

“If things carry on as they are, we will see more boroughs’ become effectively bankrupt. This brings massive uncertainty to the future of our communities’ local services, and could ultimately mean more costs to the government when emergency interventions are required.

“London boroughs are doing everything we can to turn this situation around, but we need urgent action from ministers. Only national government has the powers and resources required to bolster councils’ budgets and reduce homelessness pressures – particularly through investing far more in affordable housing.”

Securing funding for the work councils are doing to get to net zero  – whether it's to make homes cheaper and greener to heat, or to build charging infrastructure to encourage widespread electric vehicle ownership, is essential.

But with UK Research and Innovation estimating that £20bn a year will be needed for local net zero delivery to 2050, questions around how that work can best be financed are very live.

Following up on our Green Finance Guide (launched in September last year), London Councils' Climate Unit has partnered with economists from Hertfordshire Business School at the University of Hertfordshire to produce Financing Local Net Zero - a policy paper on the public finance routes available to councils to address barriers to climate action.

The policy paper evaluates local borrowing and national funding and financing options in the context of the relative financial frameworks available to local and national government.