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, 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.
