'A hugely disappointing development' - London Councils responds to spending review announcement

  • By JackGraves

Responding to the government’s announcement that its upcoming spending review will only cover a single year rather than a three-year period, London Councils has emphasised the worsening pressures on boroughs’ finances and the urgent need for stability.

This is the third year in a row that local authorities will receive a one-year financial settlement, with boroughs highlighting the inefficiencies brought about by short-term funding arrangements and the difficulties in planning future budgets for local services.

Cllr Georgia Gould, chair of London Councils, said:

“This is a hugely disappointing development which misses an opportunity to provide councils with much-needed financial certainty and to help us deliver the services our communities rely on. It is vital that the government urgently addresses the growing crisis in local government budgets. 

“Boroughs are at the forefront of London’s response to the ongoing pandemic, with council services playing a crucial role in caring for older and more vulnerable residents, housing the homeless, supporting businesses, and keeping Londoners safe. These services are essential for helping London recover and for addressing the stark inequalities the last few months have made clear.

"However, boroughs are facing enormous pressures after a decade of government funding reductions and months of lost income and increased spending to support our communities through the pandemic. Even with the government’s interventions we’ve seen so far, boroughs are still expecting a £1 billion funding shortfall this year. 

“The government should use the spending review to stabilise council finances and deliver a sustainable solution for social care funding. We will continue highlighting the key finance pressures facing boroughs and making the case for long-term investment in London’s local services.”  

In its submission to the government’s spending review, London Councils made the following points: 

  • The immediate focus for the government must be to deliver the national economic recovery from the consequences of the pandemic. This cannot happen without a strong recovery in London which, before the crisis, contributed a fiscal surplus of £39 billion.
  • London’s economic recovery relies on government taking some immediate steps urgently - such as targeted extension of existing business rates reliefs, grants such as the Reopening High Streets Safely Fund, job retention schemes, business loans and customer confidence incentives.
  • These immediate actions must be implemented alongside sustainable, long-term measures such as investment in a green recovery to address climate change, boosting housing delivery by giving councils complete flexibility over Right To Buy receipts, and devolving skills and employment responsibilities to London boroughs and the Mayor.
  • Covid-19 has blown a £1 billion hole in boroughs’ budgets for this year, according to London Councils' latest estimate. The total impact of the pandemic – as seen through councils’ falling income and rising expenditure – is expected to be £2 billion in 2020-21. The financial position facing boroughs is so dire that emergency spending reductions may be required in the coming months if the government doesn’t provide further assistance.
  • Homelessness support, children’s services, and adult social care all make substantial contribution to London’s Covid-19 response and resilience, but all are under particular pressure as demand for services has out-stripped the resources available from government funding. London Councils now seeks above-inflation increases in investment, with funding to be prioritised for these service areas.
  • Even though London’s population has grown by 12% over the past decade (almost twice the rate of growth across the rest of England) and boroughs now serve nearly a million more people than in 2010, council budgets have endured consistent reductions in recent years. The overall resources available to London local government fell by over a quarter in real terms since 2010-11.
  • Boroughs want to end their over-reliance on central government funding and decision-making. They point to their success during the pandemic in strengthening community participation (such as co-ordinating volunteers at food hubs) and collaborating cross-borough and with other partners. With more powers and resources devolved to a local level, boroughs will be even better placed to sustain services, innovate, and contribute to the post-pandemic recovery.

More information on London Councils' submission to the government's spending review can be found at: www.londoncouncils.gov.uk/csr