Councils still face budget gap despite additional government funding

Councils will still face significant budget gaps next year, despite additional funding announced last week, a local authority has warned.

On Wednesday the government announced the provisional local government finance settlement, which promised £69billion of funding for councils across England.

Lambeth council welcomed the cash injection, but warned of significant challenges that remain ahead.

Cllr Claire Holland, leader of Lambeth council said: “The Local Government Settlement provides welcome additional funding for services in Lambeth, with growth of £11million in our core spending power.

“The settlement has provided funding at a greater level than our earlier forecasts, but the increase in funding does not address the funding gap and growth in the spending pressures we are experiencing in a number of areas.”

Coming into the settlement, Lambeth had 34 per cent less in real terms spending for every resident as a result of 14 years of government austerity measures. 

Added to this, rising costs and rising demand for services means the local authority must save around £69million from its budget over the next four years.

Cllr Holland said: “One year’s funding settlement was never going to be able to reverse the impact of those 14 years of cuts, especially given the economic inheritance the new Government has received. 

“So we need to be open with residents that we still face significant budget gaps, unprecedented demand for emergency housing for homeless families and rising demand for adult and children’s social care.” 

Proposals to bridge its funding gap were agreed by the council’s cabinet on December 9. 

The council will now consider the full implications of the Local Government Finance Settlement and bring forward final budget proposals to cabinet and full council in February.

In addition to these savings, housing services are under pressure due to years of underfunding, ageing council estates and the cost of extra fire safety work needed following the Grenfell tragedy.

Over the last 14 years in Lambeth alone, Government cuts and unfunded policies have taken £500million out of the ‘Housing Revenue Account’ budget which is used to maintain the borough’s council homes.

Lambeth council is the second largest social housing landlord in London with 23,600 socially rented homes, as well as 10,000 leasehold properties.

As a result, the council is in discussions with the Ministry for Housing, Communities and Local Government to determine what actions will need to be taken to balance the budget over the next few years and how services can continue to be delivered.

Cllr Danny Adilypour, Lambeth’s deputy leader and cabinet member for housing, new homes and investment, said: “The situation is stark. Previous governments placed restrictions on how councils could run and fund their housing revenue accounts, and then imposed rent cuts that have cost the council tens of millions of pounds a year. 

“That’s money that we don’t have to improve our repairs service or to invest in ensuring every home is maintained to a high standard.

“We have made good progress in our housing maintenance work, and a national inspection outcome announced in November highlighted Lambeth’s successful improvement journey. 

“But we can only keep this going if we get fresh investment in our housing services and our homes, and that is what we are working to secure.”

Pictured top: Lambeth Town Hall (Picture: Lambeth council)