London Councils warn of £2bn funding gap by 2020

London borough councils face a £2bn funding shortfall by 2020, London Councils has said in its submission to the Autumn Statement.

It said the capital faces particular problems because of the size of its population, which is forecast to grow by 24% by 2039, twice the rate of the rest of the country. The capital’s population is also more likely to be transient and to have complex needs.

The submission warned that London’s current level of non-statutory services is not sustainable without stable funding mechanisms.

Cllr Claire Kober OBE, chair of London Councils, said: “The current four-year funding settlement for London does not take into account large levels of population growth – meaning it’s even tougher on boroughs than it first appears.

“Local government must be given the tools to meet rising demand for services and it is vital that stable and sustainable funding models are put in place to allow our city to grow enough to meet these demands.  We hope to see something which will reflect this in the Autumn Statement.

“With boroughs already spending huge chunks of their budget on social care, it is clear many will be unable to continue to provide the public services they currently offer.

“Government has a responsibility to ensure local councils are not left to deal with these huge rising pressures alone with funding settlements which simply don’t add up.”

London Councils said the government should provide additional funding for the new financial burdens councils face.

This should include a burdens assessment for the National Living Wage, and support for councils’ increased contributions to pension schemes and employers’ national insurance, as well as any new burdens in the Homelessness Reduction Bill.

London Councils also warned it is currently providing a “hidden welfare state” for people who are subject to immigration control and have no recourse to public funds (NRPF), the majority of whom live in London. It said the government should carry out a burdens assessment for any new policies with an impact on NRPF.

Housing is another major issue in London, which needs a minimum of 50,000 additional homes a year to meet the growth in demand. Right to Buy sales in London have also been three times greater than expected, meaning boroughs are expected to replace stock.

London Councils said the government should commit to a 10-year capital settlement, to be managed by the Greater London Authority and borough councils, and should allow councils to retain Right to Buy receipts.

Furthermore, it said the government needs to clarify how exactly health and social care integration will be achieved by 2020, and commit to collaboration between the NHS and local government in sustainability and transformation plans (STPs).

(Image c. Ray Wewerka)

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