National Audit Office’s Warning On The State Of London Council Finances.

London Councils says boroughs in the capital will be left grappling with a funding shortfall of at least £500m in the coming year (2025-26), with Havering being one of the council’s struggling.

The National Audit Office’s (NAO) latest warning on the state of council finances shows the need to support local early intervention services, according to London Councils.

The cross-party group welcomes the NAO’s new analysis, which highlights that although local government funding has increased, it has not kept up with demand or complexity of needs.

The NAO, which assesses value for money in government spending, points to financial pressures limiting councils’ ability to invest in early intervention or prevention to help manage levels of demand. The NAO is recommending a “whole-system, cross-government” approach to ensure councils’ financial sustainability, including through its current Spending Review.

London Councils says boroughs in the capital will be left grappling with a funding shortfall of at least £500m in the coming year (2025-26).

It was recently confirmed that seven London boroughs would receive Exceptional Financial Support (Havering being one) accounting for a third (£418m) of the national total of £1.4bn. However, London Councils argues these emergency borrowing measures burden boroughs with further debts and will not be enough to return them to a stable financial footing.  

The umbrella body is urging the government to use the Spending Review to deliver much-needed investment in local services after a prolonged period of underfunding and instability. Boroughs in the capital receive around 28% less funding per Londoner compared to 2010.

Among London Councils’ key asks is a call for overall council funding to be restored to 2010 levels by 2028-29, requiring real-terms increases of 4% every year.

London Councils’ Spending Review representation to the government can be found here.  

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