Give boroughs funding tools to ‘tackle poverty and drive growth’

Boroughs continue to face immense financial pressures and the entire funding system needs significant reform, London Councils has declared in response to the publication of the local government finance settlement for 2023-24.  

With MPs due to discuss the settlement on Wednesday (8 February), the cross-party group has set out its key priorities for ensuring local services have adequate funding for taking on the capital’s challenges, such as tackling poverty and driving economic growth.

Although the settlement will deliver a funding uplift to boroughs, London Councils highlights the following concerns:

  • High inflation and increased demand for council services – including from residents struggling due to the cost-of-living crisis – mean London boroughs will still need to make £100m of savings in 2023-24 to balance their budgets. £100m is equivalent to London boroughs’ entire annual spending on children’s centres and early years services.
  • Given the cost-of-living pressures facing residents, it is disappointing that a third of the total funding increase available depends on boroughs raising council tax to the maximum permitted level.
  • The funding uplift from the government follows a period of significant reductions. London boroughs’ overall resources will still be 18% lower in real terms compared to 2010-11, even though population growth means there are around 800,000 more Londoners using local services.
  • Short-term funding arrangements undermine boroughs’ ability to invest strategically. The 2023-24 funding settlement for councils is the fifth single-year settlement in a row, which makes it harder for boroughs to assess what resources will be available for services beyond this timeframe.

London Councils argues that boroughs need long-term funding assurance to maximise their impact across a range of policy priorities shared with the government such as tackling poverty and homelessness, addressing pressures in adult and children’s social care, speeding up the net zero transition, and encouraging economic growth in all communities.

Boroughs also want to be empowered with new resource-raising flexibilities, reducing their reliance on council tax and central government grants. London Councils is keen to work with ministers in exploring new policy solutions for sustaining local government finances and enabling boroughs to respond to their residents’ needs as effectively as possible.

Cllr Georgia Gould, Chair of London Councils, said:

“Boroughs play a vital role in supporting Londoners through the cost-of-living crisis, but for too long have been hampered by inadequate funding and a lack of long-term planning from central government. The entire system needs urgent reform.

“London faces a wide range of major challenges. Giving boroughs better funding tools is essential for investing in local services and enabling us to make faster progress in reducing poverty, driving inclusive economic growth, tackling climate change, and supporting Londoners’ other key priorities.”  

London Councils' briefing to MPs is available here


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