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Fix broken funding system to plug £1.5bn gap, London councils say

London Councils has warned that increasing demand from residents and inadequate funding from central government have led to an increasing number of services being placed on the critical list.

Ahead of the Autumn Statement later this year, the organisation has warned of the threats that a lack of funding will pose to already struggling services, such as housing and children’s services, in addition to the risks which have already been exposed in adult social care – which has an anticipated funding gap of £300m to £400m by 2020.

Its warning comes just a day after the LGA, representing councils nationwide, challenged Whitehall to close the reported local government funding gap of almost £6bn by 2019-20 by providing enough resources in the upcoming Budget.

The capital’s population is growing 10 times faster than that of the rest of the country, and currently matches that of Scotland and Wales combined. By 2020 it is expected that it will have experienced 63% funding cuts since 2010, despite its population reaching 9.1 million by that same date. Research by London Councils suggests that there will be a black hole of £1.5bn in borough finances by 2020.

Cllr Claire Kober OBE, the organisation’s chair, said: “London boroughs are facing a 63% budget cut during this decade despite having a duty to provide a broader range of services to a growing number of people. We operate in a thriving global city and have the expertise to get things done, but frustratingly, we do not have the powers to ensure that our residents’ needs are met.

“The impact of such a significant drop in funding on services such as housing, children’s services and adult social care cannot be underestimated. Residents are already being affected and our capital’s reputation as a great place to live and work will be damaged unless things change.

“In the short term we are urging government to recognise the £1.5bn shortfall that London boroughs are facing. However, it is clear that the local government funding system is broken and we need a more sustainable solution. Therefore, we pledge to continue working with government to reform public services and seek new opportunities for devolution.”

London Councils is calling on the government to recognise unfunded burdens and provide additional resources, accelerate progress on devolution talks, and begin discussions around how to empower local leaders to provide sustainable public services.

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