Local government finances ‘unsustainable’, London Councils tells Treasury

Local government finances ‘unsustainable’, London Councils tells Treasury

Local authorities in London are starting to buckle under the pressure of continuing government funding cuts and a growing crisis in provision of children’s services, according to a submission to the Treasury made in advance of next week’s budget.

In a 20-page document, London Councils, the body that represents the capital’s 32 boroughs and the City Corporation, urges the government to “undertake a realistic assessment of spending pressures faced by the sector” ahead of next year’s public spending review and to deliver “greater, not fewer freedoms and flexibilities” to enable councils to raise more revenue locally to help cope with rising demand for their services.

Uncertainty about the review and other aspects of funding is placing “further strain on a sector that has already delivered more than its fair share of the deficit reduction agenda,” the submission says, claiming that the decade to 2020 will have seen “core funding to London local government cut by 63%,” amounting to “a real terms reduction of over £4 billion.”

The submission stresses to the Treasury that “London delivers a net fiscal surplus of nearly £32.5 billion” which provides “vital resources for the whole of the UK and requires investment if it is to be maintained.”

A section of the submission appraising “the financial challenge” predicts that, in the context of London’s ongoing projected population increases, the combined impact of funding reductions and rising demand will leave London boroughs needing to make savings of “at least £2.1 billion to balance their budgets over the four years 2018-19 to 2021-22.” This has entailed boroughs earmarking “over 40%” of their financial reserves in order to plug the gap. “Clearly, this trend is not sustainable,” the submission says.

Pressure on children’s services budgets is described as “acute and intensifying”, as manifested in “growing levels of overspending in children’s social care” and strains on provision in education services for children with special educational needs and disabilities. Certain boroughs are also having to cope with growing numbers of unaccompanied asylum seeking children. The submission asks the government to provide additional funding to meet these and other growing pressures affecting children.

The submission also ask for decisions and greater clarity over the retention of local business rates by boroughs, urges investment through the budget in skills training and transport and digital infrastructure, and proposes “more fundamental reforms” in terms of devolution of powers and public service reform. Chancellor Philip Hammond will present his budget next Monday, 29 October.

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