Responding to the government’s Budget and Fiscal Devolution Roadmap, Cllr Kam Rai, Deputy Chair of London Councils, said:
“A fair and prosperous London is essential to creating a fair and prosperous UK. Growth in the capital doesn’t just benefit Londoners – it raises living standards across the whole country.
“Boroughs needed a Budget that bolsters resources and turbocharges local delivery. Although the government faces a tough fiscal situation, empowering councils to drive local growth pays dividends for the national economy.
“Devolution should come as close as possible to communities. As London receives new fiscal powers – including keeping more of the money raised in business rates and income tax – London boroughs must have a key role. Boroughs know our communities best and deliver the crucial local services Londoners rely on every day.
“We therefore welcome the government’s commitment to working with boroughs as well as the GLA to develop a bespoke approach for London. Boroughs need to be equal partners with a formal say on devolved funding decisions alongside the Mayor so we can help ensure the best possible results across the capital.
“The overall outlook for London boroughs’ finances remains extremely difficult, especially due to skyrocketing social care and homelessness costs. We will continue to seek sustainable funding solutions to end the crisis in town hall finances, including through the government’s next Spending Review. Boroughs remain as committed as ever to working with the government on our shared priorities such as building more council homes, supporting more Londoners into work, and generating good growth in every postcode.”
Devolution
Boroughs are determined to play a full and active part in shaping the next stages of London’s devolution journey.
Following the Budget’s commitment on retention of business rates and income tax, London Councils will seek to clarify what share will come to boroughs. This is vital considering boroughs’ role providing local services to businesses and supporting economic growth.
The cross-party group says that fiscal devolution must improve boroughs’ overall level of resources, which is key to reducing reliance on central government, giving them more control of their own destiny, and creating better incentives to drive local growth in communities.
Housing
London is grappling with the most severe housing and homelessness emergency in the country. London Councils estimates one in 50 Londoners (210,000) are homeless, and boroughs collectively spend over £5m daily on providing temporary accommodation.
The Budget confirms a welcome funding boost for rough sleeping support and to the Social and Affordable Homes Programme (SAHP). Boroughs await further detail on what this means for London.
London Councils has previously identified a pipeline of over 50,000 potential new council homes in the capital. Even with the SAHP uplift announced at the Budget, further financial support will be required to help boroughs deliver all these homes in the coming years.
Boroughs will continue to seek an end to the freeze on temporary accommodation subsidy levels. The amount the government pays councils through the welfare system to subsidise temporary accommodation has been frozen since 2011, even though housing costs have increased hugely in the subsequent 15 years. Increasing the subsidy so it is more in line with today’s housing costs is vital for sustaining boroughs’ finances and enabling them to keep supporting homeless Londoners.
Infrastructure
London Councils welcomes new mechanisms announced at the Budget to support key infrastructure projects in the capital such as the Bakerloo Line extension, West London Orbital, and upgrades to Stratford International and Euston.
These are agreed priorities within the London Infrastructure Framework – a single document agreed by London Councils and the Mayor of London setting out the infrastructure projects needed to enable economic growth, housing, and climate resilience across the capital.
It will be critical that the locally impacted boroughs are involved in the planning and can effectively benefit from and further mobilise growth created by the infrastructure investment. Boroughs want London empowered to invest in its own growth by allowing the capital to retain land value uplift generated by infrastructure projects. This would support investment in the next generation of growth-enabling infrastructure.
Employment and skills
Almost 1.3 million Londoners are currently economically inactive. Boroughs are eager to be empowered to improve the impact of local support and help more residents into work. London Councils also looks forward to the final report of the Milburn Review.
London’s five Get Britain Working Trailblazers supported more than 6,000 Londoners in their first year. Boroughs are pushing for guaranteed funding for a third year of the trailblazers so that proven programmes due to end next year are not lost to a funding cliff-edge.
Boroughs’ overall finance pressures
Ahead of the Budget, London Councils warned of a growing funding gap threatening to destabilise local services and undermine delivery.
London Councils forecast a funding shortfall for boroughs of up to £1.2 billion this year (2026-27) and £5.2 billion between now and 2030.
In the lead up to the next Spending Review, London Councils will continue to analyse boroughs’ finances and push for national policy changes to end the crisis in local government finances.
Pressures are driven by the fast-rising cost of providing services and growing need from vulnerable Londoners. Adults’ and children’s social care, homelessness, and special educational needs and disabilities (SEND) services continue to see increasing levels of demand.
The government’s 2025 Fair Funding Review improved funding levels for some London boroughs but saw London’s overall share of national funding for local authorities reduce.
London local government is disproportionately reliant on the government’s Exceptional Financial Support (EFS) scheme compared to other English regions. Nine of London’s 33 local authorities currently receive EFS, accounting for more than a third of the £1.5 billion received through EFS by local authorities in England.
