London Councils warns borough budgets are on 'knife edge'

London Councils said the capital's boroughs faced a collective shortfall of £400m in 2023, rising to £500m next year

Councils' budgets are on a "knife edge" as overspending increases, analysis by London Councils has found.

The cross-party group said the capital's borough councils faced a collective shortfall of £400m in 2023, rising to £500m next year.

It has called for the government to urgently support local services and help stabilise council finances.

A Levelling Up spokesperson said London boroughs had received an increase of 9.3% in core spending power in 2023.

It added: "We stand ready to speak to any council that has concerns about its ability to manage its finances or faces pressures it has not planned for."

'Perfect storm'

London Councils, an organisation that represents London's 32 borough councils and the City of London, said nine in 10 boroughs were expected to overspend on their budgets this year.

It said the authorities were facing a "perfect storm of prolonged high inflation, fast-increasing demand for services and insufficient government funding".

Acting chair Claire Holland said borough finances were on a "knife edge, with grim implications for the future of local services in the capital".

"The government must use the Autumn Statement to bolster council finances," she said.

"This will be crucial for helping boroughs stabilise budgets and sustain London's local services."

London Councils has called for the government to increase overall funding to at least 9%, invest in reducing homelessness and give councils more devolved powers.

Croydon Council has already declared bankruptcy, while Havering Council, in east London, said it could be bankrupt within six months.

Enfield Council said there was "no evidence" it would go bust, despite £1.12bn of debt, the 10th highest of England's local authorities.

London Councils said despite there being 800,000 more Londoners since 2010, London boroughs' resources remained a fifth lower than they were 13 years ago.

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