William Eichler 13 May 2019

London council budgets slashed 17% over last decade

London council budgets slashed 17% over last decade image

London’s local authority budgets have dropped by nearly a fifth - or 17% - per head over the last eight years, a new study has revealed.

The think tank Centre for London has analysed how council budgets and spending in the capital have changed since 2010/11.

It found that all principal service areas, with the exception of children’s social care, have seen budget reductions, with planning and development, highways and transport and cultural activity budgets facing the largest cuts.

Councils have seen an overall 17% fall in their budgeted service expenditure per head, from £879 in 2010/11 to £729 in 2018/19. This reduction, which excludes education, public health and police services, rises to almost 35% when inflation is considered.

Planning and development budgets have been cut by 59% since 2010/11 and highways and transport budgets have been cut by 54%. Cultural activities budgets have dropped by 42%.

Inner London boroughs have seen the biggest cuts, with Westminster (-32%), Newham (-30%), Tower Hamlets (-29%), Hackney (-28%), Camden (-25%) and Wandsworth (-25%) all seeing cuts of 25% per head or above.

Only two councils, Barnet (+1%) and Kensington and Chelsea (+10%), have seen increases over the last eight years.

Despite these cuts, the Centre for London did find that Government funding is beginning to ‘feed through’.

Budgeted expenditure per head over the last year increased by 2% across Greater London, from an average of £713 to £729. 20 of London’s 33 councils saw their budgets increase or stay the same.

‘London boroughs, like other urban authorities across the country, have shown great ingenuity in adapting to hard hitting cuts, but they are running out of road,’ said Silviya Barrett, research manager at Centre for London.

‘There are also concerns that the forthcoming Fair Funding Review will affect the longer-term funding allocations of those councils that have seen the biggest cuts.

‘The drive for devolution seems to be stuck. It’s time to give the UK’s distinct localities the power and resources to set local tax levels and raise their own taxes.

‘This would put service delivery back on a sustainable path, reducing the sense that local areas are competing for one ‘pot’ of funding.

‘Fiscal devolution would also ensure decisions are taken as close as possible to those they affect, enabling boroughs to better shape services to suit their own local needs and strengthen their communities.’

Cllr Peter John, chair of London Councils, said: ‘Centre for London’s analysis is yet another stark warning about the huge financial pressure councils are under.

‘Government funding for London boroughs has fallen 63% since 2010 and our overall spending power has reduced by a third.

‘Meanwhile, London’s population has grown by a million and demand for complex support for our most vulnerable residents has risen even faster.

‘Boroughs cannot deal with austerity for much longer. It is time for Government to listen to our concerns. The Spending Review later this year must seriously address the sustainability of vital local services.’

Cllr David Harvey, deputy leader of Westminster City Council, said: 'Westminster is not special, but it is different and has unique pressures on its services. More than one million people a day come through the city – to work, to visit the West End or enjoy our famous attractions. These people use services but do not pay council tax. That is significant when you consider the West End alone costs around £10m a year to clean. The system needs to recognise differences like this where they impact on any council.

'We need to have a grown up and wide-ranging conversation with the Treasury on how we finance local government and come up with a sustainable model.'

Leaving nothing to chance image

Leaving nothing to chance

The ‘levelling-up’ Budget is era-defining and ambitious in scope – but we will have to wait until the summer Spending Review to understand the blueprint, says Localis’s Jonathan Werran.
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