London Coucils demand more funding in Spending Review

Following an analysis that has revealed that boroughs will suffer from a £500 million shortfall in the coming year, London Councils are calling on the government to consider better council investment in the government’s Spending Review, set to be announced this spring.

The cross-party group highlights boroughs’ determination to push for growth in their communities, especially through increasing the rollout of affordable homes, but warns that government investment must match these ambitious targets.

London Councils has produced that at least seven London boroughs will need emergency borrowing in the coming year (2025-26) as part of the government’s Exceptional Financial Support scheme to balance their budgets.

The Spending Review will set budgets across all government departments for the following three years (from 2026-27 to 2028-29), so London Councils is making the case for much-need investment in local services following mass underfunding and instability. Compared to 2010, London boroughs today receive around 28 per cent less funding per Londoner.

As a result, London Councils are calling on the government to restore council funding to 2010 levels by 2028-29, which will need a real-terms increase of four per cent each year.

In its submission to he Spending Review, the body presented its priorities around five themes:

Better funding support is needed should the boroughs wish to sustain London’s local services, as an increasing number of boroughs are on the brink of bankruptcy. Financial sustainability for local governments are key.

Housing poses a serious challenge, with one in 50 Londoners currently homeless and living in temporary accommodation. London Councils are asking for more resources and flexibilities to tackle homelessness and deliver new affordable homes.

As London is the UK’s global city, boroughs are vital to delivering sustainable, inclusive growth across London that will boost the UK’s prosperity now and in the future. London Councils assert that an integrated funding settlement for London would help achieve this, with formal shared decision-making arrangements between the Mayor and boroughs will ensure effective delivery and management of funds.

London will need greater investment in preventative services to ensure Londoners can benefit from positive, long-term outcomes that improve mental and physical health, deliver access to better education and employment opportunities, as well as encouraging wider social and economic gains.

And, finally, London Councils want assurance. By reforming the assurance regime, sector-led improvement will be supported while also reducing public costs, as over the last decade, the regulation of local authorities has become complicated, without co-ordination, and has brought significant financial burdens.

Councillor Claire Holland, chair of London Councils, said: “Investment in local government is critical to driving inclusive economic growth in the capital and across the UK.

“Councils have a pivotal part to play in supporting the government’s growth ambitions, particularly when it comes to building much-needed new homes in the capital. We need the tools and resources to make this happen.

“After years of permacrisis in council finances, the Spending Review is a vital opportunity to turn things around and deliver a more sustainable financial future. Securing long-term investment will enable boroughs not only to survive, but thrive as local champions for growth.”