Extra £600m government cash for English councils ‘insufficient’ in London

London Councils says the funding announced this week fails to address soaring homelessness costs

Claire Holland (credit Magnus Andersson-Lambeth Council)
Claire Holland (credit Magnus Andersson/Lambeth Council)

The organisation representing local authorities in the capital has said extra government cash announced this week remains “insufficient”.

The Department for Levelling Up, Housing and Communities (DLUHC) announced yesterday (Wednesday 24th) that an additional £600m in total would be provided to local councils across England after a number of council leaders raised concerns they faced bankruptcy because of the financial pressures they were under.

Social care is one of the biggest pressures, and £500m out of the £600m will specifically be used to address this. However, another significant pressure is soaring temporary housing costs because of rising homelessness – particularly in London which has by far the highest rents in the UK.

Enfield Council is forecasting an overspend of £19m on temporary accommodation by the end of the 2023/24 financial year.

Claire Holland, deputy chair of London Councils and also the leader of Lambeth Council, said: “It is welcome that government has listened to the sector and acknowledges the serious financial pressures putting immense strain on local services. However, even with the extra funding, London boroughs face a funding gap of over £400m next year.

“It is disappointing that the plight of homeless families living in temporary accommodation was not acknowledged. The national housing crisis is particularly acute in London, with one-in-50 Londoners living in temporary accommodation.

“This year London boroughs are forecast to overspend by at least £150m to provide housing to those in need due to an extreme lack of affordable homes across the capital.

“London boroughs have forecast to overspend on adult and children’s social care by £350m this year. While they will receive £77m from the additional £500m to support adults’ and children’s social care, it is insufficient to meet the need and complexity of need of our residents.

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“It is also very concerning that the formula used to distribute this funding takes no account of children’s social care needs. If it did, London boroughs would receive more than £100m.”

Councils across England will receive a £600 million support package, in addition to funding outlined at the provisional settlement, to help them deliver key services, the Levelling Up Secretary has announced today.

In additional to the extra cash for social case, as part of this week’s government announcement all councils will see an increase in what’s called ‘core spending power’ of at least 4% – an increase from the 3% previously announced in December as part of the annual spending review for local authorities.

Levelling Up Secretary Michael Gove said: “We have listened to councils across England about the pressures they’re facing and have always stood ready to help those in need.

“This additional £600m support package illustrates our commitment to local government. We are in their corner, and we support the incredible and often unsung work they do day-to-day to support people across the country.”

Local government minister Simon Hoare added: “This injection of funding will help ensure services which people rely on can continue – and demonstrates how important we view local government. We have listened to various organisations and considered their views seriously and I’m grateful to those who reached out to me.

“The funding offers something for all of our hard-working councils, with additional funding for social care as well as help for rural authorities to deliver essential services.”

Alongside this, an “expert panel” to advise the government on the financial sustainability of the sector will be established by DLUHC and contain “both internal and external experts”.

Shaun Davies, chair of the Local Government Association, said: “The LGA welcomes that the government has acted on the concerns we have raised and recognised the severe financial pressures facing councils, particularly in providing services to the most vulnerable children and adults through social care services and delivering core front-line services to communities.

“We will continue to work with government to achieve a sustainable long-term funding settlement and updated distribution mechanisms, as well as legislative reform where needed, so that local government can play its full part in delivering inclusive prosperity and growth through investment to support people, places, and the planet.”

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