London boroughs on financial "knife edge" as nine in ten expected to overspend on budget

Following a survey of council finances, the cross-party group has warned that nine in ten London boroughs expect to overspend on their budgets this year, estimated at over £400m in total across the capital.

The group said pressures on adult and children's social care, as well as the capital's worsening homelessness crisis, were the biggest drivers of boroughs' overspends.

The group, which recently estimated that almost 170,000 Londoners are currently homeless and living in temporary accommodation, said that London boroughs are expected to overspend on temporary accommodation by £90m this year.

Ahead of the Autumn Statement, setting out the government's future spending plans, the group has called for an overall funding increase of at least 9% for councils, alongside investment to reduce homelessness.

It has also called for reforms to the "broken" local government finance system to give councils more devolved powers and longer-term funding settlements.

Cllr Claire Holland, Acting Chair of London Councils, said: "Borough finances are on a knife edge – with grim implications for the future of local services in the capital.

"The combination of higher costs due to spiralling inflation, skyrocketing demand for services, and insufficient levels of government funding leaves boroughs in an extremely precarious position. The pressure is relentless – we face a £400m shortfall this year, which rises to £500m next year unless the government provides more support."

She added: "Councils play a vital role in their communities providing essential services and in tackling so many major challenges, such as addressing homelessness, unlocking economic growth, and making faster progress towards net zero.

"The government must use the Autumn Statement to bolster council finances. This will be crucial for helping boroughs stabilise budgets and sustain London's local services."

Adam Carey