London Councils’ budgets on ‘knife edge’

London Councils’ recent analysis indicates that the capital’s boroughs will be required to generate savings exceeding £500 million in the upcoming year in order to stay financially afloat. 

According to their latest examination of council finances, a cross-party consortium cautions that 90% of London boroughs anticipate budgetary overspending this year, with an estimated cumulative excess of over £400 million throughout the city.

London Councils are concerned that local services will be under more pressure than ever, especially amidst the ongoing cost of living crisis.

Adult and children’s social care is also at risk as it is one of the biggest costs to councils, as well as the homelessness crisis. 

Ahead of the government’s Autumn Statement, which will take place on November 22, boroughs have urged for increased financial support to help balance the books. These include: 

• 9% increase in funding
• Efforts to address homelessness, including increasing Local Housing Allowance and Homelessness Prevent Grant 
• Initiating changes to the fragmented local government finance structure, including extended funding agreements for councils and increased local autonomy.

Cllr Claire Holland, Acting Chair of London Councils, said:

“Borough finances are on a knife edge – with grim implications for the future of local services in the capital.

“The combination of higher costs due to spiralling inflation, skyrocketing demand for services, and insufficient levels of government funding leaves boroughs in an extremely precarious position. The pressure is relentless – we face a £400m shortfall this year, which rises to £500m next year unless the government provides more support.

“Councils play a vital role in their communities providing essential services and in tackling so many major challenges, such as addressing homelessness, unlocking economic growth, and making faster progress towards net zero.

“The government must use the Autumn Statement to bolster council finances. This will be crucial for helping boroughs stabilise budgets and sustain London’s local services.”