Pressured London councils ask government for devolution and funding help

by Dave Hill

Philip Hammond has made his conference speech and, assuming cabinet mud-wrestling doesn’t consume him in the meantime, can now concentrate on drawing up his autumn budget. The chancellor will be as aware as anyone that Brexit Britain might depend more heavily than ever on London to keep it buoyant. The capital’s local authorities have an important part to play in this life raft operation. Will Hammond float their boat or sink it?

In a 27-page representation to government, London Councils, the body that speaks for the capital’s 32 boroughs and the City corporation, enterprisingly asserts that “the unique set of circumstances in which we find ourselves” has “created an important opportunity for the government to address some of the key economic and financial challenges facing the country”.

A reminder that “London’s success benefits all” is accompanied by another, pointing out – and here my paraphrasing is quite loose – that policies introduced by Hammond’s predecessor George Osborne, nowadays editing the London Evening Standard, have blown big, harmful holes in Town Hall finances.

“Core funding from central government will have fallen by 63% in real terms over the decade to 2019/20,” the document says, and an estimated “funding gap” of £1.5bn will have opened up by that time, about three times the amount on hand to fill it. Who suffers? The young, the old, the very vulnerable and people in need of housing for a start.

Provision of adult social care, a fraught and pressing issue everywhere, is highlighted. Pressure on children’s services budgets are described as an even “greater and more immediate challenge” for many boroughs. Strains on already tight housing revenue accounts are now being placed under “unbearable strain” due to the costs, still rising, of safety checks and actions following the Grenfell Tower fire.

The squeeze on housing budgets has been sharply tightened by Osborne’s imposing a 1% cut in the level of social housing rents for four years from 2015. This will cost boroughs around £800m or the equivalent of around 4,000 new homes that might otherwise have been built, according to London Councils’ figures. Meanwhile, Right to Buy (RtB) continues to be a further drain on revenue, and with most of the proceeds going to the Treasury, boroughs are still struggling to replace the stock they lose.

The document asks for return to inflation-linked rent rises plus 1%, the “full retention and flexible use of council RtB receipts” and that money raised from any extension of RtB to housing associations – remember all that madness from the 2015 general election? – be kept in London.

Finally, it beats once more upon the drums of devolution, welcoming the modest steps towards allowing London government greater control over adult education and the work and health programme, but asking for much more power to shape skills training to its specific and varied local needs. Health and criminal justice are other familiar items on the list, along with the programme for fiscal devolution proposed by the London Finance Commission. All good ideas for keeping London in good order.

You read this stuff, you note its grasp of the city’s distinctiveness and you wonder once again why any government of any stripe even slightly mindful of the UK’s variegated character and with even half an eye on its post-Brexit future wouldn’t just hand over the cash and the powers to match in the name of national progress and renewal. But then neither the present Conservative administration nor the supposed Labour one in waiting appear especially keen. Does the fact that Boris Johnson signed up to several of these things when he was London Mayor make them any more likely to happen? My wild guess would be no.

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