In a stark warning to the Chancellor of the Exchequer, Jeremy Hunt, ahead of his Autumn Statement next month, Lambeth Council leaders said an “inflationary storm”, rising demand and government inaction threatens to leave the borough facing a £38 million funding gap.
A joint letter from Lambeth Council Leader, Cllr Claire Holland and Finance and Cost of Living lead Cllr David Amos warned that local government is in the midst of a financial crisis, and even boroughs that have managed their finances well, such as Lambeth, are facing large budget gaps.
They said that, since 2010, Lambeth council’s core government funding has been slashed by over 50%. The Institute for Fiscal Studies 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. With thousands of residents grappling with the cost of living, unaffordable housing, and economic uncertainty, the demand for local services has never been higher.
Analysis by London Councils forecasts that across London, councils need to make over £500 million in savings, yet most of them are still likely to overshoot their budgets. Lambeth’s own financial planning estimates that, over the next four years, the council faces a daunting £38 million budget gap.
Lambeth has maintained key services and provided extra support for the communities worst hit by the pandemic and the cost-of-living crisis. For example, the council has distributed a £10m package of targeted financial support for those who are struggling, supported more than 27,000 households struggling to pay their bills, and distributed free school meal vouchers in the holidays for families on low incomes. Almost 18,000 households have had their council tax bills slashed to nil as part of the expanded council tax support scheme.
But the council has now signalled that immediate government support is essential to protect essential services in Lambeth and ensure the well-being of its residents.
Cllr Holland said: “Communities in Lambeth rely on vital local services every day, from housing to social care, and, amid continuing high inflation, it is costing us much more to deliver the services our residents need.
“We are seeing the impacts of 13 years of austerity and the government’s refusal to properly fund local services, with councils of all political colours issuing financial warnings in recent months. The council is going to be forced to have to make even more tough choices as year after year of cuts add up. We are urging the government to give us the funding that we need to protect vital frontline services over the next few years.”
Cllr David Amos, Cabinet Member for Finance and Cost of Living, said: “On top of 13 years of austerity, councils up and down the country are now faced with an inflationary storm that may result in drastic cuts to front line services.
“Despite this, Lambeth is targeting millions to support low-income families and those struggling through the cost-of-living crisis. But without immediate and long-term support from government this task will become even more difficult.”
The Council’s appeals to the Chancellor include:
- An increased, multi-year funding settlement to provide certainty and to bridge the £38 million funding gap.
- Sustainable and long-term funding for homelessness services.
- An urgent funding solution to reduce the pressures on providing safe care for vulnerable children and young people.
- Revenue-raising powers, such as retaining 100% of business rates growth, exploration of measures such as a tourism tax and Vehicle Excise Duty to be returned to London, to bolster financial resilience.
- More funding for council house construction and the retention of right-to-buy receipts, plus planning law reforms to expedite council home construction.