London councils warn of £700m funding gap and ‘toughest of toughest’ decisions for local services

Based on the government’s current funding plans, London boroughs face a gap of up to £400m this year and £700m in 2023-2.

London councils have warned that local authorities in the capital could face up to £700m of cuts unless the government boosts their funding.

London Councils, a cross-party organisation that represents London’s 32 borough councils and the City of London, says savings of this scale will inevitably mean reductions to the city’s local services.

Declaring that boroughs face their most challenging financial outlook since 2010, the group said issues around the energy crisis and soaring inflation have heaped pressure on budgets.

Bin collections could be affected by the cuts

Based on the government’s current funding plans, London boroughs face a gap of up to £400m this year and £700m in 2023-24, it said.

The group reports that boroughs find themselves forced to consider options they have previously avoided as much as possible, including cutbacks to social care, bin collections, and homelessness services.

As Chancellor Jeremy Hunt prepares for his autumn budget of November 17, London Councils are asking for a repeat of actions taken by the government at the height of the Covid-19 emergency to help protect local authorities.

Cllr Georgia Gould, Chair of London Councils described the funding outlook for boroughs as “bleak.”

“The scale of the savings required is colossal and will inevitably mean cuts to the vital frontline services that so many Londoners rely on.

“Boroughs will do everything we can to protect our communities but a £700m funding gap next year will force us into the toughest of tough decisions unless the government offers new support.

“Just as ministers worked effectively with councils at the height of the Covid-19 pandemic, we need a similar spirit of partnership in the face of the cost-of-living emergency.

“Properly funding local services is essential for supporting struggling households and building economic growth in our communities.

“We’re urging the government to listen to councils’ concerns and take swift action to avoid a bad situation becoming even worse.”

The Department for Levelling Up, Housing and Communities said London authorities had benefited from a rise in funding.

A spokesperson said: "We recognise councils may be concerned about their budgets and are working very closely with them to understand the impact of inflation.

"This year, we have made an additional £3.7bn available to councils in England, including an extra £685m in London.

"Through the Energy Bill Relief Scheme, we are also providing a discount for councils dealing with rising energy costs this winter."