Soaring inflation has left London’s town halls needing £700m to maintain services and pay staff, London Councils has warned.
London Councils, the cross-party group representing all 32 boroughs and the City of London Corporation, is concerned that vital local services and economic recovery will be jeopardised without immediate extra investment and certainty over future funding.
Although the government increased local authority funding this year, fast-rising inflation has effectively cut £100m from the financial uplift boroughs received for 2022-23.
Since the 2022-23 local government finance settlement in February – which delivered a £330m real terms increase in London boroughs’ core spending power – the change in GDP inflation from 2.7 per cent to 4.1 per cent in March, means the funding increase is now worth £100m less in real terms than when it was agreed.
London Councils said construction contract costs for some projects have risen by 20-25 per cent due to labour pressures and rising material costs.
This now makes many planned projects unviable, affecting schools, housing, and transport investment.
Councillor Georgia Gould, chairwoman of London Councils, said: “Rising inflation and the cost-of-living crisis are having a crippling effect on families who are having to make increasingly difficult decisions about whether to eat or heat their homes.
“Boroughs welcome the government providing some much-needed extra support to households, and we are seeking a similar intervention to help councils deal with their massive finance pressures.
“Eye-watering inflation means our funding has effectively been cut by £100m already this year – and overall we face £400m of additional budget pressures.”
Pictured: London Councils meeting (Picture: London Councils)
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