Cuts and population boom pushing councils to financial black hole, lobby group warns

London’s ageing and expanding population combined with Whitehall cuts are pushing councils to a £2 billion funding cliff edge, a lobbying group today claims.

The huge funding gap looks set to confront the 32 boroughs in the capital by 2020, according to London Councils, the group lobbying the Treasury on their behalf.

Out of all regions in the country, boroughs in the capital face the biggest reduction in “core spending power”, the organisation is warning.

It says some boroughs are already spending more than 70 per cent of their budgets on social care.

Longer average lifespans are resulting in increasing pressure on them to expand provision for elderly people as well as those with physical and learning disabilities.

At the same time, population growth across younger age brackets is putting pressure on councils to deliver more school places and children’s services.

Councillor Claire Kober, the chair of London Councils, said the Treasury’s funding settlements “simply don’t add up” and warned many would be unable to continue to provide the public services they currently offer.

Her words, ahead of the Autumn Statement, are intended to put pressure on the government to give more money to the capital.

She argued that the four year settlement “does not take into account large levels of population growth – meaning it’s even tougher on boroughs than it first appears”.

Cllr Kober, who is also the leader of Haringey Council, added: “Even with the assumption that all boroughs will raise council tax, which is unlikely, the scale of these funding cuts coupled with inflation and a rise in demand for services means London will be facing a funding gap of £2bn in 2020.”

A spokesperson for the Department for Communities and Local Government said: “Our funding settlement will give London nearly £35bn to spend between now and 2020, and the capital will get a larger share of business rates from next year.

“This will allow the Mayor and London councils to deliver high quality services whilst keeping council tax bills down.”

A Treasury spokesperson said they would not comment on the contents of this year’s Autumn Statement.