• Press release

Budget leaves borough finances under 'relentless squeeze'

Boroughs across the capital will continue to face a “relentless squeeze” on their finances, London Councils has warned following today’s Budget. 

The announcements made by the Chancellor bring “little short-term relief and no long-term solutions” to the crisis in council finances, according to the cross-party group. 

While welcoming the Chancellor extending the Household Support Fund – which was due to end by April and had been a top Budget priority for London Councils – the decision to continue the fund for only a further six months risks reducing support for low-income Londoners just as winter approaches. 

London Councils previously highlighted how boroughs used the fund this year to arrange 472,000 meals for children from low-income households during the school holidays and gave emergency food support to 218,000 families. 

Boroughs are particularly concerned by the Budget’s lack of action on homelessness. Amid a worsening national homelessness crisis, London faces the most severe homelessness pressures in the country. 

One in 50 Londoners is currently homeless, with boroughs collectively spending £90m each month on temporary accommodation for homeless residents. Boroughs point to the “bankruptcy risk” this poses to town halls in the capital.  

London Councils’ analysis shows that boroughs will face a shortfall of at least £400m in the coming year, brought about by skyrocketing demand for services, spiralling inflation, and many years of insufficient government funding.

The umbrella body points to the 15% reduction in boroughs’ overall levels of resources since 2010, even though the capital’s population has grown by 800,000 over the same period. Boroughs have also reduced staff numbers by 25% and made major efficiency savings to protect statutory services such as social care and homelessness support.

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

“The relentless squeeze on borough finances looks set to continue. 

“We’re pleased the Chancellor listened to the call made by councils and charities for an extension to the Household Support Fund. This fund enables us to provide vital assistance to low-income Londoners struggling with the cost of living.

“However, the extension is only for a further six months. This means less help for vulnerable residents just as the difficult winter months approach.

“Overall, we are left with little short-term relief and certainly no long-term solutions to the crisis in council finances. The fundamental factors driving this are the fast-rising levels of demand for services and the substantially reduced levels of resources available to us. Boroughs will continue to call for urgent reform of the local government funding system.”

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