Fresh calls for more cash from government amid warnings of new wave of council bankruptcies
A cross-party group representing London’s local councils has warned the government that an extra £400 million is needed to prevent further insolvency, with outer boroughs said to be most at risk.
London Councils says boroughs will continue to grapple with “huge” funding shortfalls due to service pressures and costs, despite a 5.5% real increase in core spending power in this year’s central government funding accounts. He says he will continue.
The £400m funding gap is roughly the same amount that each London borough spends on homelessness in a year.
All but two of the capital’s 33 local authorities are expected to exceed their budgets this year (2023/24) by more than £600m, or an average of £18m per council.
London’s outer boroughs are among the “lowest funded per head in the country” and face “particularly challenging prospects” due to a growing number of people in poverty, London City Council said. .
Enfield City Council’s excess spending is expected to reach £29 million this year as the cost of temporary accommodation soars.
Congress has a legal obligation to balance the budget, so funding shortfalls must be addressed by cutting spending or drawing on reserves. Adult social care and children’s services are statutory services that place further strain on council finances.
Last month, the government provided an extra £600m to councils across England, and MPs are expected to agree a funding settlement today (Wednesday 6th).
But London City Council argues that this is not enough and that a series of recent warnings of financial collapse across local authorities are the result of years of underfunding, with the capital’s boroughs being severely affected. There is. It said the increase in the frequency of Section 114 notifications last year “should not be taken lightly.”
Research by the Institute for Fiscal Studies, a think tank, found an estimated 17% gap between funding needs and the actual funding levels of local authorities in London. This was by far the biggest difference of any region in England.
London councils estimate that in the current fiscal year 2024/25, each borough’s total financial resources will be 15% lower in real terms than in 2010.
Claire Holland, deputy leader of London councils, said: “Boroughs will continue to face a challenging financial outlook for the foreseeable future.”
“The funding increases set out in the Government’s financial settlement are not enough to address the huge funding shortfalls we face. Huge pressures on local services, soaring costs and longstanding deficiencies. With insufficient funding, City Hall’s finances are on the brink.
“It is not in anyone’s interest for councils to find themselves in an article 114 situation. Londoners want stability in their local services. We continue to urge ministers to extend funding support. We urge them to work together to make local government finance systems fairer and more sustainable.”
In its next spring budget, to be published on 6 March, the London Assembly will ask the Treasury to continue the Household Support Fund, address the costs of homelessness and ensure that funding better reflects local conditions. It calls for reforms to the local government finance system to address the financial pressures faced by each district. need.
