London Councils has welcomed a parliamentary debate on the state of local government finances in the capital, due to take place on the same day as the Spring Statement.
The cross-party group says ending the worsening crisis in town hall finances is critical for sustaining services and generating economic growth across the capital.
The Westminster Hall debate has been secured by Calvin Bailey MP (Leyton and Wanstead) and is an opportunity for MPs to discuss the extreme pressures facing boroughs’ budgets.
More than a decade of structural underfunding, combined with rising costs and skyrocketing demand for services such as homelessness support and social care, has led to the current crisis. Boroughs receive around 28% less funding per person compared to 2010 and London Councils says boroughs will be left grappling with a funding shortfall of at least £500m in the coming year (2025-26).
It was recently confirmed that seven London boroughs will receive Exceptional Financial Support from the government, accounting for almost a third (£418m) of the national total of £1.3bn. However, London Councils argues these emergency borrowing measures burden boroughs with further debts and will not be enough to return them to a stable financial footing.
Boroughs are urging the government to help restore stability to their budgets, including through using the upcoming Spending Review to deliver much-needed investment. This will enable boroughs to focus on early intervention and prevention – critical to driving down future demand for services, as well as delivering better outcomes for Londoners. It will also put boroughs in a better position to boost local economic growth, including through housebuilding.
Cllr Claire Holland, Chair of London Councils, said:
“The worsening crisis engulfing boroughs’ finances has worrying implications for local services and the capital’s growth prospects.
“The combination of years of structural underfunding, fast-rising demand for services such as homelessness and social care, and spiralling costs has pushed boroughs to the brink of bankruptcy.
“We know MPs share our concerns and want better funding solutions. Boroughs are as determined as ever to work with the government on our shared priorities, including more focus on prevention, delivering affordable housing, and boosting economic growth. Restoring stability to our budgets and local services is key to achieving this.”
Among London Councils’ key asks is a call for overall council funding to be restored to 2010 levels by 2028-29, requiring real-terms increases of 4% every year. The cross-party group’s priorities also include protection of funding for demand-led services to meet forecast levels of growth, access to a broader range of funding sources, and investment in the early intervention and prevention services that bring the most benefits over the long term.
London Councils’ Spending Review representation to the government can be found here.