Much-needed funding boost welcome but no ‘age of optimism’ for council finances – London Councils responds to the Budget and Spending Review

London Councils has welcomed the much-needed increase in funding announced by the Chancellor, while stating that the boost will not be enough to establish an age of optimism in local government finances. 

The cross-party group warns of particular pressures in London due to:

  • the lack of government compensation for boroughs’ £400 million local tax losses caused by Covid-19
  • uncertainty over adult social care funding reforms
  • London receiving a lower share of levelling up investment. 

London Councils also highlights that the extra investment will not bring funding back to 2010 levels. London boroughs have seen a 25% reduction in funding since 2010, even though population growth means there are now a million more Londoners. 

Cllr Georgia Gould, Chair of London Councils, said: 

“Today we’ve seen some recognition of the vital role that local services play in our communities but we urgently need more resources.

“Boroughs have proved themselves crucial in the response to Covid-19 and are determined to secure a post-pandemic recovery that drives green growth and tackles inequalities in the capital. London is a dynamic, successful city but also a place of immense challenges – including the highest unemployment, homelessness, and relative poverty rates in the UK. 

“However, the announced funding increases aren’t enough to meet the huge challenges facing our communities. In particular, there remains great uncertainty over adult social care, which is the largest area of council spending and supports some of our most vulnerable residents. We’re also deeply concerned that London is missing out on a fair share of levelling up support. 

“We’ll continue working with the government on our shared ambitions while also making the case to ministers for the powers and resources we need to make faster progress.”

In its initial assessment of the Spending Review’s implications, London Councils expressed concern about the lack of government compensation for boroughs’ local tax losses incurred in this financial year as a result of the pandemic. The disproportionate impact of Covid-19 on London’s economy means London boroughs must deal with tax losses of £400 million over the next two years. 

The umbrella body also noted the continuing uncertainty over future arrangements for adult social funding. London Councils has highlighted the need for £400 million of additional annual investment in the capital’s adult social care services to meet demand pressures. There are 150,000 Londoners – many of them of working age – receiving adult social care support and levels of demand are rising fast. 

The Spending Review confirmed that London will receive a lower share of the Levelling Up Fund compared to other regions in the UK, which means disadvantaged communities in the capital will lose out on support.

London has the highest rates of relative poverty in the UK and the economic impact of Covid-19 has hit London hard, with the capital experiencing the country’s highest rise in job losses and unemployment.  

London has the UK’s highest unemployment rate at 5.8% (compared to the UK average of 4.5%). 400,000 Londoners are claiming unemployment-related benefits. The latest figures show around one million Londoners claiming Universal Credit. Youth unemployment remains a considerable challenge for London, with one in five young people in the capital aged 16 to 24 currently without a job.



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