63% funding reduction is taking its toll, warns London Councils

  • By Gemma Kappala-R...

London Councils is today warning that an increasing number of local services are on the critical list due to growing demand from residents and inadequate funding from central Government.

In a submission to Government ahead of the Autumn Budget, London Councils has highlighted the threat that lack of investment poses to under-pressure teams working in housing and children’s services, on top of the risks already exposed in adult social care.

London’s population will swell to 9.1 million by 2020, having grown at ten times the rate of the rest of England. Yet by 2020 London boroughs will have experienced a 63% funding reduction since 2010. 

London Councils’ research shows that that there will be a cumulative £1.5 billion funding black hole in borough finances by the end of the decade. 

Cllr Claire Kober OBE, Chair of London Councils, said:

“London boroughs are facing a 63% budget cut during this decade despite having a duty to provide a broader range of services to a growing number of people. We operate in a thriving global city and have the expertise to get things done, but frustratingly, we do not have the powers to ensure that our residents’ needs are met. 

“The impact of such a significant drop in funding on services such as housing, children’s services and adult social care cannot be underestimated. Residents are already being affected and our capital’s reputation as a great place to live and work will be damaged unless things change.

“In the short term we are urging Government to recognise the £1.5 billion shortfall that London boroughs are facing. However it is clear that the local government funding system is broken and we need a more sustainable solution. Therefore we pledge to continue working with Government to reform public services and seek new opportunities for devolution.”

To download London Councils’ Autumn Budget submission, click here.


London Councils is calling on the Government to use the Autumn Budget to:

1. Stabilise the local government finance system by recognising currently unfunded burdens, providing additional resources as appropriate and removing restrictions that prevent local councils from raising or spending their own resources.
2. Accelerate progress on existing devolution discussions with local government in general and London government in particular, 
3. Start new conversations around how to empower local leaders to provide truly sustainable public services. 

Key facts

London matters 

• London generates just under 30% of the national ‘economy taxes’ - around £140 billion per year in 2014/15. This supports investment and service provision across the UK, and London’s economy depends on the success or the rest of the country in turn. 

London is growing

• London already has a population roughly equal to that of Scotland and Wales combined, and its population will grow by 2.8% between now and 2020, twice the rate of growth in the rest of England.

London has experienced significant funding cuts

• The 2017-18 local government finance settlement confirmed cuts to core funding of 26% in real terms over 3 years. This comes on top of a cumulative cut to core funding of over 50% in real terms since 2010-11, meaning core funding from central government to councils will have fallen by 63% in real terms over the decade to 2019-20. 

• London boroughs face a total funding shortfall of at least £1.5 billion per year by 2020. 

Adult social care is in crisis

• Despite additional funding provided by Government, London Councils estimates that by 2020 there could be a cumulative funding gap in social care in London in the region of £300 million to £400 million.

• The cost per home care placement in the capital is set to increase by an average of 7.5% and the cost of home care provision for over-65s by an average of 3.1% over the year to 2017-18.

Housing services are in crisis 

• London has more than 50,000 households in temporary accommodation, three-quarters of the national total, and we estimate that London boroughs are already spending an additional £170 million to meet the existing shortfall. 

• The Homelessness Reduction Act will come into force in April 2018. It will require boroughs to provide more services to more people. We estimate that this will cost £77 million per year in London alone. Government has only allocated £61 million over three years for implementation of the Act across the whole of England. 

• London boroughs are actively responding to the Grenfell Tower fire by reviewing the fire safety of accommodation they own. Early estimates based on information from the 16 boroughs that have responded to date suggests that the combined total cost of remedial work has already reached approximately £366 million. This figure is likely to rise as further estimates are received. 

• According to the Department for Communities and Local Government’s new methodology for calculating local housing need, London will require 72,000 new homes a year to keep pace with demand from residents. Extensive planning will be required to plan for and deliver these new homes and associated infrastructure. 

Children’s services will be in crisis soon 

• Children’s services funding is an urgent priority for London and will only continue to rise up the national agenda as demand pressures grow.

• Between 2013/14 and 2016/17, the number of pupils with Education, Health and Care (EHC) plans in London increased by 10%. Having such a plan is an indicator that a child has special educational needs. 

• Council spending on these pupils in 2016/17 was greater than the amount allocated by Government in 26 out of 31 boroughs, with a combined funding shortfall among overspending boroughs of £100 million. 

• A recent survey of boroughs found that 27 out of 30 boroughs reported overspending in children’s social care budgets in 2016/17, averaging £3.5 million per borough.