The upcoming Budget must recognise London’s crucial role in supporting the government’s mission of economic growth, a cross-party group of MPs has heard.
Speaking at a recent meeting of the All-Party Parliamentary Group (APPG) for London, Cllr Claire Holland, Chair of London Councils, highlighted the capital’s £50bn fiscal surplus to the Treasury each year, enabling investment and benefiting communities across the entire UK.
Cllr Holland emphasised London boroughs’ commitment and contribution to this agenda. Earlier this year, London Councils and the Mayor of London unveiled the London Growth Plan, with a focus on helping more Londoners into work, bringing down housing costs, and improving public transport.
The plan sets out how this would kickstart productivity in the capital and expand London’s economy by £107bn within a decade.
As the Budget approaches, London Councils is urging government investment to help secure these growth ambitions. The umbrella body points to three transport infrastructure projects – the extension of the DLR to Thamesmead, the Bakerloo Line upgrade and extension, and the West London Orbital – as key strategic priorities with the potential to support the delivery of over 60,000 new homes and more than 40,000 jobs.
However, Cllr Holland reminded MPs of the worsening financial crisis facing town halls across the capital. London Councils’ latest analysis forecasts a £4.7bn funding shortfall for London local government in the coming years – undermining boroughs’ ability to sustain local services and invest in growth-boosting measures.
With the results of the Fair Funding Review 2.0 expected shortly, London Councils is reiterating its call for the government’s reforms to local authority funding to match resources to levels of need for council services.
Cllr Holland stressed the critical relationship between high levels of deprivation in a community and high levels of demand for services such as homelessness support and children’s social care.
The Indices of Deprivation published by the government on 30 October reveal that:
London is now on average the most deprived region in terms of income. The ‘Income’ domain of the Index of Multiple Deprivation measures the proportion of the population experiencing deprivation relating to low income.
London has the highest average deprivation levels in the deprivation indices for children and older people (i.e. the ‘Income Deprivation Affecting Children Index’ (IDACI) and ‘Income Deprivation Affecting Older People Index’ (IDAOPI)). These indices measure the proportion of children aged 0-15 living in income deprived families and the proportion of adults aged 60+ who experience income deprivation, respectively.
London Councils welcomes the government’s decision to incorporate housing costs into how income deprivation is measured in the Index of Multiple Deprivation. This will better reflect London’s poverty challenges and need for council services.
Although the new deprivation data is expected to shape future funding allocations to councils, London Councils warns of many continuing issues with the government’s funding reforms. Research shows that the proposed new Children’s and Young People’s relative needs formula dramatically underestimates levels of need in the capital and assumes London’s share of need has decreased by nearly 40%. This continues to be the biggest driver of an anticipated reduction in London’s share of funding and could see boroughs with significantly less funding than they need to provide vital local services.
Cllr Claire Holland, Chair of London Councils, said:
“London is a crucial part of the national economic engine – and we want to make our full contribution to driving growth across the country. There is huge growth potential in the capital and boroughs are committed to playing our part, from supporting businesses in our local areas to grow and scale, to helping deliver new housing and infrastructure.
“At the same time, we are a city with severe challenges. We are held back by our housing and homelessness crises, which are in turn driving huge financial pressures for councils. The upcoming Budget must provide London with the tools and resources it needs to build new homes and turbocharge growth. That means investing in transport infrastructure in the capital, giving greater fiscal autonomy to London government, and restoring stability to borough budgets.”
London Councils’ priorities for the Budget can be found here.
Professor Hugh Brady, President of Imperial College, and Matthew Fell, Director of Competitiveness at BusinessLDN, also addressed the APPG for London meeting on what the capital needs from the Budget, held on 4 November.
The APPG is co-chaired by Florence Eshalomi MP, Lord Ranger of Northwood, and Munira Wilson MP.
