London Councils Face £5.2 Billion Shortfall by 2030

London's 33 local councils are facing a record £1.2 billion overspend this year, with a projected collective shortfall of £5.2 billion by 2030. Stephen Cowan, chair of London Councils, warned that the local government finance system is broken as funding fails to keep pace with rising costs, including the £5.5 million daily expense of housing homeless families. Inflation-adjusted funding is projected to be nearly 17% lower in 2028 than in 2010.

To address these gaps, five boroughs—Kensington and Chelsea, Westminster, City of London, Wandsworth, and Hammersmith and Fulham—received ministerial permission to exceed the standard 5% council tax increase cap. Wandsworth is preparing residents for a 94% increase starting in April. Additionally, Bromley and Lambeth councils have sought similar permission to exceed the cap. Nine boroughs, including Barnet, Croydon, and the City of London, are currently receiving Exceptional Financial Support from the national government to avoid bankruptcy.

Education Secretary Lucy Powell defended the tax increases, attributing the crisis to the previous Conservative administration. Powell stated that local government funding was completely decimated over 14 years of Tory rule and noted that the current Labour government cannot resolve the issue overnight. The Government of the United Kingdom stated it has made over £78 billion available for council finances for the next year, while urging local authorities to prioritize taxpayers when setting tax levels.