London Councils has warned that council finances in the capital are at risk of being broken by the ‘havoc’ being wreaked by housing pressures.
According to the group, the stability of council budgets are under threat from the increasing numbers of Londoners that are homeless and in need of temporary accommodation, with this posing the fastest-growing risk to councils. This comes as several local authorities across the capital are moving ever closer to effective bankruptcy.
Forecasts from London Councils have predicted that there will be a budget shortfall of at least £700 million next year across all services unless the government acts and provides additional funding support. With the end of October seeing the group making its submission to the Treasury ahead of the Budget, the top priority has been identified as stabilising local government budgets.
As councils work to achieve wider goals such as tackling the housing crisis, driving economic growth, and investing in preventative services, London Councils has outlined how bolstering councils' finances is critical.
Chair of London Councils Cllr Claire Holland said:
“The housing crisis is having a devastating impact on Londoners’ lives and wreaking havoc on town hall finances across the capital.
“Housing and homelessness pressures are the fastest-growing risk to London borough finances. At a time when we need to invest in social housing and support homeless Londoners, boroughs are facing an unrelenting squeeze on our resources. The unavoidable reality is that spiralling costs and years of underfunding threaten to break boroughs’ budgets.
“The current outlook is bleak, but we are committed to working with the government to find a better way forward. The upcoming Budget is a crucial chance for the government to restore much-needed stability to council finances and the local services we provide. This will enable boroughs to play our part in tackling the capital’s housing crisis and driving economic growth in London and across the country.”
Whilst the government has already committed to multi-year spending reviews for councils and ended competitive bidding, two moves that London Councils has welcomed, they will not address the threat that council finances are under in the immediate future. This threat will only exacerbate more general issues around the country, as councils and their services can, as London Councils says, be ‘powerful tools for growth.’
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