Fast-deteriorating situation for council budgets across the capital, November 2023

  • By Amy Leppänen,

London Councils’ latest survey of boroughs reveals a fast-deteriorating situation for council budgets across the capital. Our new analysis shows London boroughs are set to overspend on their original budget plans by £600 million this year (2023-24).

This comes despite the incredibly difficult decisions boroughs have taken over recent years to balance budgets. London boroughs’ overall resources are 18% lower in real terms since 2010-11, despite serving 800,000 more residents, equivalent to a city the size of Leeds.

Since 2010, new burdens and responsibilities have also been placed on boroughs by central government without adequate additional funding, such as the transfer of Council Tax Support in 2013-14. We estimate these new burdens have added over £1.1 billion in borough’s annual cost pressures.

The 2023-24 overspend forecast has increased 50% due to a spike in spending between June and September, brought about by ballooning demand for local services – especially homelessness support. London faces the most severe homelessness crisis in the country, with London Councils estimating that one in 50 Londoners is currently homeless and living in temporary accommodation arranged by their local borough.

Key priorities for the Autumn Statement

We are urging the government to use the upcoming Autumn Statement to stabilise council finances and avoid a domino effect of Section 114 notices across the country. Our key priorities include:

  • An overall funding increase of at least 9% (in line with what was received by London boroughs last year).

  • Investment to reduce homelessness, including through uplifting Local Housing Allowance rates to cover at least the bottom 30% of rents – which would save over £100 million to the public finances in London alone, and prevent 60,000 London renters becoming homeless.

  • Reforms to the broken local government finance system, such as giving councils longer-term funding settlements and more devolved powers.

You can find more information on our priorities for the Autumn Statement here.

Amy Leppänen,, Parliamentary Officer