London Councils has warned of a widening £5.2bn funding gap facing the capital's boroughs by 2030, even as it welcomes what it calls ‘exciting opportunities’ from Government devolution plans.

In its submission to the Autumn Budget, the cross-party group said boroughs share the Government's priorities on council housing, employment and growth, and argued greater fiscal autonomy would speed up progress.

Its analysis points to a £1.2bn shortfall this year alone, with nine of London's 33 boroughs relying on emergency borrowing through the Government's Exceptional Financial Support scheme to avoid bankruptcy.

Cllr Stephen Cowan, chair of London Councils, said devolving fiscal resources to boroughs would strengthen their ability to tackle London's challenges and grow the economy, benefiting communities nationwide.

He added that mounting budget pressures were holding boroughs back, warning that the funding gap ‘looms large over everything we do.’

‘Everyone knows the local government finance system is broken. The upcoming Budget is an opportunity to help stabilise town hall finances, give boroughs more fiscal tools, and support the local delivery we all want to see,’ he said.

London Councils' key asks for the Autumn Budget

Fiscal devolution

• Boroughs to retain and have a say in allocating at least 50% of revenues from an overnight visitor levy

• Greater retention of revenue from business rates and business rates growth

• Involvement in any new devolved income tax arrangements for the capital

• Devolved fiscal powers to be jointly designed by the Mayor and boroughs

Housing

• Further increases to grant funding, building on the Social and Affordable Homes Programme

• An end to the temporary accommodation subsidy gap by lifting the freeze on Local Housing Allowance (LHA) rates

• An uplift of LHA to the 30th percentile of market rents

Employment and skills

• A single, multi-year funding pot for skills and employment support, co-designed by boroughs and the GLA

• Guaranteed funding for a third year of the Get Britain Working Trailblazers, to avoid a funding cliff-edge

Infrastructure

• Continued investment in priority transport projects, including the Bakerloo line extension and West London Orbital

• Power for London to retain land value uplift generated by infrastructure projects, to fund future growth-enabling schemes