London councils face £5bn gap by 2030, group warns

London's councils face a combined budget shortfall of £5.2bn over the next four years, according to the organisation that represents them.

Nine London boroughs, up from seven last October, now rely on the government's Exceptional Financial Support scheme, which allows struggling councils to take out emergency loans to balance their budgets.

London Councils said its latest forecast, based on figures supplied by the capital's 33 local authorities, was worse than the £4.7bn gap it predicted last October.

It said boroughs faced a gap of almost £1.2bn in the current financial year alone, driven by rising demand for social care, homelessness support and special educational needs services.

Stephen Cowan, chair of London Councils, said funding had "failed to keep pace with skyrocketing costs and demand for services.

"Everyone knows the local government finance system is broken."

He said the upcoming budget was "an opportunity to help stabilise town hall finances, give boroughs more fiscal tools, and support the local delivery we all want to see".

London Councils has previously called the emergency support scheme "a misnomer", and said there were serious concerns it was burdening councils with further debt without putting their finances back on a sustainable footing.

However, the gap for this year is smaller than the almost £1.5bn London Councils forecast for 2026-27 last October, before the government finalised changes to council funding under its Fair Funding Review.

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