NAO Exposes Unstable Council Finances, Urges Prevention Investment

London Councils Calls for a Funding Fix After NAO’s Latest Alert

The National Audit Office (NAO) has sounded an alarm on council finances. The report reveals that, despite a lift in public money, local authorities are still playing catch‑up with growing demand and the complexity of their responsibilities.

Why the Concern?

Limited pockets for prevention – Cutbacks mean less room to invest in early‑intervention services that keep problems from spiralling.
“Whole‑system” solution needed – The NAO urges a cross‑government strategy, tightening the Spending Review to keep councils financially on track.
London’s unique strain – The capital will face at least a £500m shortfall next year (2025‑26), putting added pressure on every borough.

Emergency Borrowing Isn’t Enough

Seven London boroughs have been granted Exceptional Financial Support, stealing a third (£418m) of the £1.4bn national fund. Yet London Councils warns that this emergency relief only turns a temporary “bandage” into a heavier debt burden. The city’s residents deserve more stable funding, not a revolving door of short‑term fixes.

The Key Demand: Restore 2010 Funding Levels

London Councils is pushing for a dramatic reset:

Return council budgets to 2010 levels by 2028‑29.
Achieve a real‑term 4% increase every year to trend upward on an inflation‑adjusted basis.
Reinstate the same per‑resident spending that saw Londoners well served over a decade ago.

What the NAO’s Findings Mean for Residents

Clause 1 of the NAO report brings home a stark reality: as councils juggle bursts of homelessness subsidies and the relentless churn of adult and children’s social care, finding empty pockets for preventative services becomes a Herculean task.

“Boroughs want to put more money into prevention because we know it brings the best long‑term results for our residents,” says Chair Claire Holland. “But council finances are under extreme pressure, and each of us is trying to keep our heads above water. The Spending Review is the chance to breathe easier and push for priorities like prevention, housebuilding, and growth capabilities that benefit everyone.”

Time to Act

With London receiving roughly 28% less funding per resident than in 2010, the urgency is clear. The Spending Review isn’t just a budget shuffle; it’s a chance to rewrite the narrative, turning a “budget crisis” into a “budget opportunity.” Let’s get serious, invest smartly, and let council leaders finally breathe – instead of drowning in paperwork.