London Councils – the cross-party organisation representing the capitals 32 borough councils – have warned of a funding shortfall of £400m in 2024/25, following the governments ‘Local Government Finance Settlement’, passed yesterday in the House of Commons.
The settlement, announced annually to decide how much funding local governments around England receive for frontline services, represents a real-terms increase of 5.5% in the capitals core spending power on last years agreement.
‘Finances teetering on a cliff edge’
However, London Councils argue that it fails to tackle what it calls a crisis in adult social care, homelessness, and children’s services in the capital.
Taking aim at the government’s plans to raise council tax by 4.99% as a means of raising funds, the group claim that the government rely far too heavily on this strategy, with almost 40% of the core spending power boost relying on council tax increases.
Claire Holland, Deputy Chair of London Councils, said of the settlement:
“Boroughs will continue to face a bleak financial outlook for the foreseeable future.
“The increase in funding set out in the government’s finance settlement will not be enough to address the enormous funding gap we are grappling with. Massive pressures on local services, skyrocketing costs, and years of inadequate funding have left town hall finances teetering on a cliff edge.
“Londoners want stability for their local services. We will continue to urge ministers to increase funding support and to work with us in making the local government finance system fairer and more sustainable.”
The latest data from the Institute for Fiscal Studies indicates that the capital has a particularly severe funding disparity between council’s funding needs, and the funds they receive.
According to the data, the picture could be particularly bleak for boroughs in outer London, some of the lowest funded per capita in the country, with both growing populations and levels of deprivation.
Despite the settlement providing a real terms uplift, London Councils have also calculated the 2024-25 finance settlement will leave boroughs’ overall resources 15% lower in real terms than in 2010. Demand for services has risen substantially, as the capital’s population has grown by 800,000 during that period. Boroughs’ spending power per Londoner has decreased by around 30% in real terms since 2010.
“More money is desperately needed”
Jamie Thunder, Senior Policy Adviser at London-based poverty organisation Z2K, echoes London Council’s concerns:
“Years of funding pressures mean local councils are struggling to meet the growing need for support among residents, especially in central London boroughs like Westminster.
The housing crisis means more households than ever are in temporary accommodation – yet the money councils receive from central government to fund this has been frozen for more than a decade. That means councils have to somehow find the money to top this up, or place people in accommodation far from their family, friends, work, and school.
More money is desperately needed, but increasing council tax isn’t the answer. It will only add to the pressures faced by households, and with several boroughs considering reducing their Council Tax Support schemes, this risks causing greater hardship and poverty for low-income Londoners.”
Defending the government’s settlement in the Commons yesterday, Conservative Minister of State for Housing Lee Rowley said:
“This extra money for frontline services has been welcomed by local council’s as important support. Government always needs to take tough decisions. And, despite the suggestions of some in this place, there is always a balance to be struck.
Nonetheless, we recognise the importance of supporting local government in the face of increasing demand for local services, rising inflation and costs, and that is exactly what we are seeking to do.”
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Headline£400m funding shortfall facing London councils next year
Short HeadlineLondon facing £400m funding shortfall, councils warn
StandfirstCouncils warn that scheme will leave the capital short of the funding it requires.
London Councils – the cross-party organisation representing the capitals 32 borough councils – have warned of a funding shortfall of £400m in 2024/25, following the governments ‘Local Government Finance Settlement’, passed yesterday in the House of Commons.
The settlement, announced annually to decide how much funding local governments around England receive for frontline services, represents a real-terms increase of 5.5% in the capitals core spending power on last years agreement.
‘Finances teetering on a cliff edge’
However, London Councils argue that it fails to tackle what it calls a crisis in adult social care, homelessness, and children’s services in the capital.
Taking aim at the government’s plans to raise council tax by 4.99% as a means of raising funds, the group claim that the government rely far too heavily on this strategy, with almost 40% of the core spending power boost relying on council tax increases.
Claire Holland, Deputy Chair of London Councils, said of the settlement:
“Boroughs will continue to face a bleak financial outlook for the foreseeable future.
“The increase in funding set out in the government’s finance settlement will not be enough to address the enormous funding gap we are grappling with. Massive pressures on local services, skyrocketing costs, and years of inadequate funding have left town hall finances teetering on a cliff edge.
“Londoners want stability for their local services. We will continue to urge ministers to increase funding support and to work with us in making the local government finance system fairer and more sustainable.”
The latest data from the Institute for Fiscal Studies indicates that the capital has a particularly severe funding disparity between council’s funding needs, and the funds they receive.
According to the data, the picture could be particularly bleak for boroughs in outer London, some of the lowest funded per capita in the country, with both growing populations and levels of deprivation.
Despite the settlement providing a real terms uplift, London Councils have also calculated the 2024-25 finance settlement will leave boroughs’ overall resources 15% lower in real terms than in 2010. Demand for services has risen substantially, as the capital’s population has grown by 800,000 during that period. Boroughs’ spending power per Londoner has decreased by around 30% in real terms since 2010.
“More money is desperately needed”
Jamie Thunder, Senior Policy Adviser at London-based poverty organisation Z2K, echoes London Council’s concerns:
“Years of funding pressures mean local councils are struggling to meet the growing need for support among residents, especially in central London boroughs like Westminster.
The housing crisis means more households than ever are in temporary accommodation – yet the money councils receive from central government to fund this has been frozen for more than a decade. That means councils have to somehow find the money to top this up, or place people in accommodation far from their family, friends, work, and school.
More money is desperately needed, but increasing council tax isn’t the answer. It will only add to the pressures faced by households, and with several boroughs considering reducing their Council Tax Support schemes, this risks causing greater hardship and poverty for low-income Londoners.”
Defending the government’s settlement in the Commons yesterday, Conservative Minister of State for Housing Lee Rowley said:
“This extra money for frontline services has been welcomed by local council’s as important support. Government always needs to take tough decisions. And, despite the suggestions of some in this place, there is always a balance to be struck.
Nonetheless, we recognise the importance of supporting local government in the face of increasing demand for local services, rising inflation and costs, and that is exactly what we are seeking to do.”
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