Key priorities for the Spending Review 2021


London Councils supports the government’s aim to build back better. London is the UK’s global city and, with government support, can recover strongly from the pandemic, supporting the recovery of the whole of the UK. Through the London Recovery Board, we are already working to maximise the potential of key growth sectors. With the right funding, freedoms and flexibilities, and working in partnership with the government, the GLA, our business and voluntary sectors, the London boroughs can ensure a strong, green, inclusive recovery.

The impact of the pandemic has been felt as hard in the capital as anywhere in the UK, with London experiencing the largest number of covid cases and the highest death rate of any region. London has some of the highest levels of deprivation in country, often made more acute by the cost and shortage of housing. The Spending Review must help to level up the inequalities within London.

Our priorities for the Spending Review reflect the government’s:

  1. Levelling up opportunity, particularly for young Londoners;
  2. Supporting a green recovery, so that London can lead the transition to net zero;
  3. Unlocking housing through infrastructure as part of the plan for growth;
  4. Advancing Global Britain by supporting Global London; and
  5. Ensuring strong and innovative local public services.

We realise the fiscal context is tight, but we urge government to ensure London boroughs can help deliver these objectives.

Priority 1 - A new deal for young people

Young Londoners have been adversely affected by the pandemic, with the highest levels of youth unemployment (20%) in the UK, and 7% above pre-pandemic levels. We offer a package of reforms, building on existing schemes, to help support 98,000 young unemployed Londoners back into work, which seeks to:

  • Repurpose Kickstart funding into a London Kickstart Plus - providing support for disadvantaged young Londoners.
  • Offer early entry to the Restart Programme and more intensive day one support to those coming off furlough and those who have more barriers to getting a job.
  • Extend, with TfL, the Zip card scheme to Londoners ages 18-24 for the first six months of employment, as cost of travel is proving a barrier to employment.
  • Reform the apprenticeship levy to provide clear incentives to employers to offer entry level apprenticeships.
  • Gain a fair share of the UKSPF and Adult Education Budget for London – to fund employment and skills projects for young people and more broadly.

Priority 2 – Supporting a green recovery

London’s recovery must be a green recovery if net zero targets are to be met. This requires upfront funding and flexibilities including:

  • Green investment - to begin to unlock over £200bn of private investment required to deliver net zero across the UK’s 12 biggest cities, we seek £30m up-front funding for the next phase of the UK Cities Climate Investment Commission work.
  • Domestic retrofit – to start delivering the £98bn of investment needed to retrofit all London homes, the £3.8bn Social Housing Decarbonisation Fund and £2.5bn Home Upgrade Grant must be delivered; and financial incentives to encourage private retrofitting must be provided.
  • The Green Economy – to accelerate low carbon skills development, we’re seeking flexibility to enable councils to join up existing National Skills Fund, National Retraining Scheme and App Levy at the local level. 

Priority 3 – Unlock housing and growth through infrastructure

Housing and transport investment are key to unlocking growth and regenerating London’s local communities. We are working with our sub-regions to develop a priority list for housing and transport projects that will have the greatest impact in driving London’s recovery and want to have a continual dialogue with government throughout the SR period on this.

To help deliver the 90,000-100,000 new homes needed each year, we seek both funding and flexibilities including:

  • Long term certainty to increase social rents by up to CPI + 1% over a 30 year period, and complete flexibility over the use of Right to Buy receipts.
  • Long-term support for the Affordable Homes Programme at higher capital grant rate.

To support a sustainable transport system in London, we’re seeking:

  • A sustainable medium-term financial settlement for TfL.
  • Certainty over £75m of Active Travel and Healthy Streets funding (borough LIP funding) by decoupling it from TfL.
  • Devolution of Vehicle Excise Duty for London’s £1.1bn road maintenance backlog.

Priority 4 – Global London

London’s prospects for growth remain strong and are key to the UK’s wider recovery, but must be supported by:

  • Improving its digital infrastructure to compete with other global cities.
  • Investing in growth sectors such as life sciences, cultural, tech and finance.
  • Maximising the potential of Innovation Districts in London.
  • Relaunching London’s international visitor economy.

Priority 5 – Strong local public services

We estimate London boroughs require up to £2bn of additional funding over the SR period to meet underlying demand, inflation and the ongoing impact of covid-19 on lost income and additional spending. To continue to deliver the strong and innovative local public services Londoners deserve, the Spending Review must:

  • Extend the tax income guarantee and sales, fees and charges compensation schemes in 2021/22.
  • Increase overall funding by at least 5% each year over the SR period.
  • Provide certainty for the coming three years through a three-year settlement - failing that, setting out the overall local government funding envelope including CT principles and a minimum funding guarantee for three years; and clarify the scope and timetable for local government finance reforms.
  • Ensure the new Adult Social Care funding reforms, including the employers’ NI impact and continuing impact of long covid, are fully funded and commit to further funding if £5.4bn is insufficient.
  • Support councils to deliver an expanded, but appropriately resourced, role in public health, building on the successes of the pandemic and vaccine programme.
  • Increase rates of Home Office grant for Unaccompanied Asylum Seeking Children (UASC) and former UASC Care Leavers to reflect full cost recovery in London.
  • Support children with SEND by outlining a clear plan for all councils to eliminate accumulated Dedicated Schools Grant deficits, which are over £300m in London.
  • Deliver multi-year homelessness funding grant settlement, decoupling homelessness from core funding.
  • Support an expanded role for local authorities within local welfare provision and restore a dedicated funding stream for Local Welfare Assistance.
  • Ensure London boroughs are appropriately funded to support Afghan evacuees over the next three years, reflecting London’s higher housing costs.

Further details and additional proposals are set out in our main submission.

To read London Councils’ full submission to the Spending Review 2021, click here.