New analysis by Centre for London shows that, despite a two per cent increase in the last year, London’s local authority budgets have dropped by nearly a fifth (17 per cent) per head over the last eight years, with inner London boroughs hit the hardest.
The analysis looked at how local authority budgets and spending in the capital have changed since 2010/11. It found that all principal service areas, with the exception of children’s social care, have seen budget reductions, with planning and development, highways and transport and cultural activity budgets facing the largest cuts.
Taking London’s population growth into account, councils have seen an overall 17 per cent fall in their budgeted service expenditure per head, from £879 in 2010/11 to £729 in 2018/19 (excluding education, public health and police services). This reduction rises to almost 35 per cent when inflation is considered.
Inner London boroughs have seen the biggest cuts – with Westminster (-32 per cent), Newham (-30 per cent), Tower Hamlets (-29 per cent), Hackney (-28 per cent), Camden (-25 per cent) and Wandsworth (-25 per cent) all seeing cuts of 25 per cent per head or above. Just two councils, Barnet (+1 per cent) and Kensington and Chelsea (+10 per cent) have seen increases over the last eight years. Urban authorities – in London and beyond – have previously been more dependent on government grants but have borne the biggest brunt of cuts under austerity, which have been applied evenly across councils.
Despite this, Centre for London’s analysis also suggests that councils are starting to see additional government funding and council tax for social services begin to feed through. Budgeted expenditure per head over the last year increased by 2 per cent across Greater London, from an average of £713 to £729. Meanwhile, 20 of London’s 33 councils saw their budgets increase or stay the same.
Local authorities have needed to innovate when delivering services; directing scant resources to core statutory services, such as social services, to cope with reduced funding and rising demand from London’s growing population.
Other service areas, such as planning and development budgets have been cut by 59 per cent since 2010/11, despite housing delivery targets more than doubling from 25,000 to 43,000 units in 2015/16, and a new target of 65,000 homes being proposed in the draft London Plan.
Highways and transport budgets – which include road safety, traffic management and street lighting – have also been cut by 54 per cent, while cultural activities budgets – which include tourism, recreation and sport, and libraries – have dropped by 42 per cent.
Silviya Barrett, Research Manager at Centre for London said:
“London boroughs, like other urban authorities across the country, have shown great ingenuity in adapting to hard hitting cuts, but they are running out of road. There are also concerns that the forthcoming Fair Funding Review will affect the longer-term funding allocations of those councils that have seen the biggest cuts.
“The drive for devolution seems to be stuck. It’s time to give the UK’s distinct localities the power and resources to set local tax levels and raise their own taxes.
“This would put service delivery back on a sustainable path, reducing the sense that local areas are competing for one ‘pot’ of funding. Fiscal devolution would also ensure decisions are taken as close as possible to those they affect, enabling boroughs to better shape services to suit their own local needs and strengthen their communities.”
Cllr Peter John OBE, Chair of London Councils, said:
“Centre for London’s analysis is yet another stark warning about the huge financial pressure councils are under. Government funding for London boroughs has fallen 63 per cent since 2010 and our overall spending power has reduced by a third. Meanwhile, London’s population has grown by a million and demand for complex support for our most vulnerable residents has risen even faster.
“Boroughs cannot deal with austerity for much longer. It is time for government to listen to our concerns. The Spending Review later this year must seriously address the sustainability of vital local services.”
Cllr David Harvey, Deputy Leader of Westminster City Council, said:
“Westminster is not special, but it is different and has unique pressures on its services. More than one million people a day come through the city – to work, to visit the West End or enjoy our famous attractions. These people use services but do not pay council tax. That is significant when you consider the West End alone costs around £10m a year to clean. The system needs to recognise differences like this where they impact on any council.
“We need to have a grown up and wide-ranging conversation with the Treasury on how we finance local government and come up with a sustainable model.
“At Westminster, we are seeking local answers. Last year, we pioneered the community contribution to encourage Band H council taxpayers to contribute more voluntarily to their locality. Now Westminster is willing to go a step further, by piloting new taxes and levies related to service use and using the revenue to invest in our communities.”
Notes to Editors:
- Centre for London is the capital’s dedicated think tank and a charity.
- Figures from the City of London Corporation have been excluded from our borough by borough analysis, as the City’s unique nature makes for difficult comparison.
About the data:
- Spending data is based on individual local authorities filling out the Revenue Account (RA) suite of forms to show all their budgeted transactions related to the general fund revenue account. The figures are then compiled by the Ministry for Housing, Communities & Local Government (MHCLG).
- Budget and outturn spending data covers the financial year (April-March).
- Spending per head is calculated using mid-year estimates provided by the Office for National Statistics (ONS). 2018/19 financial year figures use mid-year 2017 estimates.
- Inflation figure calculated using the Bank of England Inflation calculator