London Boroughs Plunged Into Survival Mode, Says London Councils
London Councils has sounded the alarm: in 2025‑26, the city’s councils will be playing “survival” instead of “growth” because of a looming crisis that’s already draining budgets and stretching services thin.
What the Ministers Claimed
Under the provisional 2025‑26 Local Government Finance Settlement, the government announced:
- An extra £80 million in the Homelessness Prevention Grant.
- A 5.7% uplift in core spending power.
- A mandate that 49 % of the grant must be spent on preventing homelessness.
While those numbers look shiny, London Councils warns that borough budgets will still leave a £500 million hole in 2025‑26.
Homelessness – The Elephant in the Room
Homelessness is climbing faster than a dropping balloon at a circus: London’s “fastest‑growing risk to borough finances”.
- In 2024‑25, boroughs could overspend on homelessness by a staggering £270 million.
- One in 50 Londoners is living in temporary accommodation—£4 million is spent daily on these beds.
- That spending alone has surged 68 % in just a year.
Now they’ll be forced to use more of their general funds for temporary housing, which is a big seasoning in the already greasy budget soup.
Rising Costs, Shrinking Funding
Costs are moving up faster than a runaway train, while funds are holding steady. The new workforce National Insurance hike is only adding fuel to the fire.
- London boroughs rely on an average of £80 per applicant to meet homelessness prevention demands.
- Despite an 11 % population boom since 2010, funding per Londoner fell a tidy 28 %.
- Scores of boroughs are now barely surviving, with several requiring new Exceptional Financial Support.
Cllr Claire Holland on the Surging Waters
“Our finances are stuck in survival mode,” said the chair, Cllr Claire Holland. “After 14 years of underfunding, rising costs, and a population hungry for services, the strain is enormous.”
Key take‑aways:
- We’re appreciating the extra guardrails the government is throwing up.
- Homelessness funding is an “important step”—yet the allocation to temporary accommodation cuts a slice from the budget barrel.
- We need long‑term investment that keeps services afloat.
Budget Overruns – What’s Really Going on?
London boroughs might overspend by more than £700 million this year. The main culprits:
- Homelessness – £270 million.
- Adult and children’s social care – over £300 million.
The Need for a Lifeboat (and a Post‑Mortem)
London Councils warns: unless the government delivers more than a lifeguard with a life‑jacket, there will be built‑in deficits from 2025‑26 forward. The answer? A reform of the broken funding system, plus an early and sufficient spending review that can keep local services alive and well.
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