London Councils, which represents all 32 boroughs and the City of London, has identified massive pressure on council budgets in London that will lead to a funding gap of over £3 billion in the capital by 2020 if current demand and inflation continue.
Councils in England face a shortfall of almost £10 billion by the end of the decade and London Councils’ submission to the Spending Review 2015 highlights adult social care as the area likely to create the most acute funding issues over the next five years in the capital, in common with many parts of the country.
In addition, London has several critical factors setting it apart such as a rapidly increasing population, an acute shortage of affordable housing, the growing number of households with no recourse to public funds, as well as a unique set of public health pressures due to high demand and recent in-year cuts of £200 million.
The submission calls for greater transparency and long-term certainty about the money that boroughs receive from government rather than the current year-to-year settlements, as well as proposing that 100 per cent of all business rates should be retained locally giving councils greater control over their own funding.
Chair of London Councils, Mayor Jules Pipe, said:
“Across the country £7 in every £10 of central government funding will have been removed from local government by the end of the decade. London is facing bigger cuts than elsewhere – 44 per cent since 2010 with the same again expected over the next four years and there is growing evidence that the limit of what is possible, in terms of both productivity and efficiencies, has been reached.
“Delivering the same number and level of services will not be possible without reform of public services and new ways of working. In our submission we are urging government to press ahead with greater devolution in London to boroughs and the Mayor.
“London has some unique challenges, such as the skills gap identified by businesses, an acute lack of affordable housing and huge demands on its infrastructure. These and several other critical issues are putting London’s future prosperity at risk.”
The submission contains models which demonstrate that the biggest statutory responsibilities councils have – adult and children’s social care, public health and waste management – could account for more than 80 per cent of all local government spending in the capital by 2020.
Mayor Pipe added: "As demand for services increases and funding continues to be squeezed many highly valued but unprotected council services will become increasingly unsustainable."
More information on London Councils’ submission can be accessed here.