Rapidly rising inflation is driving hundreds of millions of pounds of additional budget pressures on local government in London, the capital’s council chiefs have warned.

While local authority funding increased this year, fast-rising inflation has effectively cut £100m from the financial uplift boroughs received for 2022-23, according to London Councils.

The cross-party group is concerned that vital local services and economic recovery will be ‘jeopardised’ without immediate extra investment and certainty over future funding.

‘Rising inflation and the cost-of-living crisis are having a crippling effect on families who are having to make increasingly difficult decisions about whether to eat or heat their homes,’ said Cllr Georgia Gould, chair of London Councils.

‘Boroughs welcome the Government providing some much-needed extra support to households, and we are seeking a similar intervention to help councils deal with their massive finance pressures.

‘Eye-watering inflation means our funding has effectively been cut by £100m already this year – and overall we face £400m of additional budget pressures.’

Since the 2022-23 local government finance settlement in February – which delivered a £330m real terms increase in London boroughs’ core spending power – rising energy prices, global supply chain shortages, and the economic impact of the war in Ukraine have seen inflation hit a 40-year high.

The change in GDP inflation (from 2.7% to 4.1% in March) means the funding increase is now worth £100m less in real terms than when it was agreed.

Cllr Gould added: ‘Just as we did during the pandemic, councils are stepping up to support their communities and provide a vital safety net. We want to continue to offer this support but without an increase in grant funding in line with inflation and, above all, funding certainty for the next two years, councils will be forced to make reductions to services, impacting those residents who need them most.’