Government funding shortfall leaves Lambeth facing budget gap

19 December 2023

Written by: Lambeth Council

News and announcements

Government funding for local authorities, including Lambeth Council, was announced by the Department for Levelling Up, Housing and Communities on Monday with instructions to raise council tax by up to five per cent from Spring to meet funding gaps caused by service pressures.

Main post content

Government funding shortfall leaves Lambeth facing budget gap

Apart from recommending that councils raise council tax, the Government increased its funding for councils by three per cent, which is below the rate of inflation, meaning Lambeth still faces a £38.3million funding gap over the next four years, including £25million next year.

The big saving target is as a result of inflation, rising demand children’s and adult social care and the rising cost of providing temporary housing for people in the borough, who in many cases have become homeless due to the cost of living crisis, big rises in housing costs, a national failure to build new affordable homes and poor conditions in the private rental sector.

Every area of council spending has been reviewed to help Lambeth ensure it can set a balanced budget in Spring, with a new report outlining the proposals agreed by the council’s Cabinet on Monday night.

Cllr David Amos, Cabinet Member for Finance and Cost of Living, said: “Lambeth, along with councils across London, have been clear to the government the level of financial strain we face, and the impacts this is having on those in our community with the highest needs.

“The Levelling Up Secretary Michael Gove has said he recognises the pressures being faced by local authorities and said we carry out tremendous work every day in delivering vital services. However the Government has failed to respond accordingly leaving us needing to continue our plans to make significant savings.”

Research by the Institute for Fiscal Studies (IFS) has found that London local government funding is 17 per cent lower relative to its estimated need, in Lambeth the IFS calculates that this has left Lambeth with £154 per person less than it needs – a shortfall of almost £49m a year for the borough as a whole.

Lambeth had joined London Councils in asking the government for a funding uplift of at least nine per cent to help cope with fast-increasing demand for services, high inflation, and the impact of years of insufficient funding from the Government.

Cllr Amos said: “It’s disappointing that the Government has failed to heed these calls, and also that much of Monday’s announcement requires council tax rises despite it being a regressive tax that hits the poorest the hardest.

“Despite these pressures the council has continued to focus on supporting residents through the cost of living crisis, making Lambeth’s neighbourhoods cleaner and more climate resilient, creating opportunities for young people, improving health and wellbeing and keeping Lambeth resident’s safe.”