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Your weekly London local government update

05 Nov 25

London boroughs face ‘impossible’ £4bn funding gap in coming years 

Town halls across the capital face an “impossible” challenge of bridging a funding gap of over £4 billion in the coming years, according to new analysis from London Councils.

The analysis reveals London boroughs’ funding shortfall is £1 billion this year, with a cumulative budget gap of more than £4bn over the next four years (2025/26 to 2028/29).

The figures are based on a survey of all 33 London local authorities organised by the Society of London Treasurers. Several factors are driving these finance pressures, including the expected impact of the government’s reforms to council funding. London Councils predicts the current proposals set out in the Fair Funding Review 2.0 would significantly reduce London boroughs’ collective share of government funds, and this is reflected in the data from the boroughs.

With final decisions over the Fair Funding Review 2.0 due to be confirmed by the government in the coming weeks, London Councils is continuing to make the case for an approach which reflects London’s high levels of need, deprivation and the cost of delivering services, as well as additional funding to ensure no local authority is worse off as a result of the reforms.

Chair of London Councils, Cllr Claire Holland ( [link removed] ),  said: “After more than a decade of structural underfunding, the resources available to boroughs are nowhere near enough to meet the spiralling cost of providing vital local services to Londoners. Research from the IFS has previously shown London has the widest gap between resource and need of any region in the country when it comes to council funding.

“The current proposals set out in the Fair Funding Review 2.0 risk exacerbating these pressures on borough budgets. Without an approach that reflects London’s high levels of need, deprivation and the cost of delivering services, further rounds of cuts are sadly inevitable and many more boroughs will be pushed into emergency measures to avoid bankruptcy.  

“The worsening crisis in council finances serves no one’s interests. Boroughs will continue working with the government to seek a solution that puts the sector back on a sustainable footing, after years of uncertainty and financial instability. This is critical to us delivering on our shared priorities, including building homes, creating jobs and driving economic growth.”

Ahead of the 2025 Autumn Budget, London Councils' representation to the government sets out key priorities for the capital, including opportunities for growth and housing delivery. ( [link removed] )

APPG for London

The APPG for London ( [link removed] ) met yesterday to discuss what London needs from the Budget. MPs heard from a panel including the Chair of London Councils, Cllr Claire Holland; President of Imperial College London, Professor Hugh Brady; and Matthew Fell, Director of Competitiveness at BusinessLDN.

The APPG for London is a forum for MPs and Peers to work together on a cross-party basis to strengthen the capital's voice in Parliament. The group’s purpose is to promote the capital in the interests of all Londoners.

London Councils provides the secretariat to the group on behalf of London government, including the Mayor of London and the London Assembly.

Case studies in prevention

To celebrate 60 years of the London boroughs, each week, London Councils is sharing prevention case studies highlighting how preventative action by London boroughs is helping to save money and improve the lives of their residents.

This week, our case study is from the London Borough of Waltham Forest, where the council is demonstrating how culture and arts projects can help residents strengthen support networks and improve their wellbeing, preventing mental health care escalations and building community resilience.

You can read the case study in full on our LinkedIn page ( [link removed] ) and all of our prevention case studies here ( [link removed] ).

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In the news this week...

Londoners face rocketing council tax bills as half of boroughs warn of bankruptcy by 2028
The Standard ( [link removed] )
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London boroughs face ‘impossible’ £1bn gap
LGC ( [link removed] )
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London councils face ‘eye-watering’ £4bn funding gap
LocalGov ( [link removed] )
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Why council taxpayers are picking up the tab for a broken housing system
Inside Housing ( [link removed] )
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Exact route of new TfL line that could run through West London with 4 new stations
MyLondon ( [link removed] )
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A by-election took place in LB Barnet's Hendon ward last week (Thursday 30 October). The by-election was won by Shimon Ryde (Conservative). You can read the result in full here. ( [link removed] )

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You can find contact details for every councillor in London in our London Government Directory here ( [link removed] ).

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Comments or queries? Email the editor ( [email protected]?subject=Key%20Issues%3A )

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London Councils is the collective of local government in London, the 32 boroughs and the City of London.
We also run pan-London services like Freedom Pass and Taxicard.
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