Boroughs in the capital are set to overspend by more than £600m this year as housing and homelessness pressures ‘wreak havoc’ on their finances, according to London Councils.
The cross-party group said the projected overspend included £250m on homelessness alone.
It warned that pressure on Housing Revenue Accounts (HRAs) was so acute that boroughs would need to make £170m of cuts to supervision, management, maintenance and repairs over the next four years.
The organisation said three boroughs’ accounts were so depleted they may run out of HRA reserves, a situation thought to be unprecedented.
London Councils warned the shortfall was set to climb to £700m next year, and said several boroughs were ‘edging closer towards effective bankruptcy’.
Its submission to the Treasury ahead of the Budget asks for a 7% uplift to core spending power next year, a doubling of the Homelessness Prevention Grant, and a new funding settlement for the social housing sector.
London Councils chair Claire Holland said: ‘The unavoidable reality is that spiralling costs and years of underfunding threaten to break boroughs’ budgets.
‘The upcoming Budget is a crucial chance for the Government to restore much-needed stability to council finances and the local services we provide.’
