London’s town halls are warning of 'inevitable' service cuts and growing financial crisis as new analysis reveals a £4bn funding gap across the capital’s boroughs.
Research by London Councils and the Society of London Treasurers shows local authorities are grappling with a £1bn shortfall this year alone — even after £400m in emergency Government support.
The cross-party group warns that without urgent action, up to half of London’s 33 boroughs could be forced to seek Exceptional Financial Support to avoid effective bankruptcy by 2028.
The pressures are being driven by rising demand for homelessness and social care services, alongside concerns that the Government’s upcoming Fair Funding Review 2.0 could cut London’s share of national funding.
London Councils is calling for reforms that reflect the capital’s higher costs and levels of deprivation, arguing that without extra investment, essential local services — from libraries to children’s centres — will be at risk.
Cllr Claire Holland, chair of London Councils, said: ‘These eye-watering figures show the frankly impossible financial challenge facing boroughs and the prospect of an enormous funding gap opening up in the coming years.’
For more on the impact of the Government's fairer funding reforms, check out The Unfair Cost of ‘Fairer’ Funding for London by Cllr Elizabeth Campbell, leader of Kensington and Chelsea Council.
