Cllr Elizabeth Campbell, leader of Kensington and Chelsea Council, warns that the Government’s fairer funding plans could strip £700m from London councils, forcing cuts to vital services and harming the capital’s most vulnerable residents.

London is the UK’s economic engine, cultural beacon, and home to over nine million people. When London prospers it is not just good for the capital, but for the country too. But the very foundations of London’s public services are under threat.

Local government has long called for financial stability. Just this year we were promised that the foundations of council funding would be fixed and that we would get early financial certainty. Now, as the Government’s consultation on fairer funding closes, it feels like those things are further away than ever for some councils.

In Kensington and Chelsea, I have fought hard to build an aspirational local authority which treats public money with due respect. A council that stands by its residents when they need us most. We have protected our most vulnerable, kept taxes low, and ensured that everyone has access to first-class services. Today we lead the country in both children’s services and adult social care, which is a testament to the power of a caring, compassionate, and progressive local authority.

I believe that the Government’s proposed funding formula would undo years of progress and place the heaviest burden on those the system is meant to protect. Should cuts of this scale go ahead, it will leave this council little choice but to cut vital services, raise taxes and consider reducing support for the most vulnerable.

And it is not just us. Across central London, councils face cuts of nearly £700m. The proposed formula for children’s services could mean £1.5bn of funding share redistributed away from the capital.

The depth and pace of the proposed cuts go far beyond what is reasonable or sustainable. This council alone stands to lose £83m, 40% of our controllable budget, in just three years.

It is a misconception to assume that Kensington and Chelsea is a wealthy council because our borough has some wealthy residents and expensive shops. Actually, this borough has the most deprived ward in London. Our housing costs are astronomical. The notion that we could up our taxes and cover the funding shortfall that way is fanciful too. Even if we increase council tax by the maximum in April, we would still have to save £35m next year alone.

I have been a councillor for nearly 20 years and a council leader for eight years. I understand the urgent need to reform local government finance, with resources allocated in line with need.

I believe fairer funding reform can be achieved in a way that tackles deprivation across the country without undermining the heart of the capital in the process.

In our response to the Government’s consultation, we have asked for three practical changes that would make it fairer for all.

Firstly, the funding formula needs to factor in the real cost of housing – a metric ignored in the proposals. By excluding housing costs from the formula, the true scale of need in London is obscured. London is the most deprived region in the country when you include housing costs. People are living without housing security and facing higher rents and mortgages. In Kensington and Chelsea, we spend 18% of our budget on addressing homelessness, yet the proposed formula allocates just 1.4%. This gap makes it harder to provide high-quality temporary accommodation at a time of record demand.

Secondly, we need more time to make changes. A 10-year period would allow councils time to make efficiencies, redesign services, and protect essential support for residents. A three-year transition period makes it impossible to responsibly manage a funding reduction of this scale without harming vulnerable people.

We will not even know what our settlement is for the next financial year until November at the earliest. The time needed to plan transitions of this magnitude is much greater than five months.

Finally, the formula should reflect the true costs borne by a capital city. In Kensington and Chelsea our population doubles daily due to workers and tourists, increasing costs for universal services such as street cleaning and waste collection. As one of the three most densely housed authorities in the country, we face unique pressures, from anti-social behaviour to pressure on public spaces.

My voice is not the only one calling for a rethink. The message is clear from my counterparts in central London, across the political spectrum. Analysis by London Councils, the Institute of Fiscal Studies, the National Children’s Bureau and Central London Forward all shows central London loses out.

Now is the time for the Government to heed the warnings, before it is too late.