Local authorities in London will be forced to find £700m of savings next year unless the Government boosts funding for local services in the capital, cross-party group says.

London Councils has warned that the energy crisis, soaring inflation, and rising demand for services has put ‘huge additional financial pressures’ on boroughs’ budgets.

The local government body calculates that under current funding plans London boroughs face a gap of up to £400m this year and £700m in 2023-24. In total, the forecast funding gap for London local government is £2.4bn over the next four years.

Underfunding of local services in the capital is a longstanding issue, according to London Councils. Overall resources available to boroughs are 22% lower in real terms compared to 2010, even though London’s population has grown by almost 800,000 (a 10% increase).

Cllr Georgia Gould, chair of London Councils, said that the funding outlook for the capital’s boroughs is ‘beyond bleak’ and warned that cuts are inevitable.

‘Boroughs will do everything we can to protect our communities but a £700m funding gap next year will force us into the toughest of tough decisions unless the government offers new support,’ she said.

‘Just as ministers worked effectively with councils at the height of the Covid-19 pandemic, we need a similar spirit of partnership in the face of the cost-of-living emergency. Properly funding local services is essential for supporting struggling households and building economic growth in our communities.

‘We’re urging the government to listen to councils’ concerns and take swift action to avoid a bad situation becoming even worse.’