London boroughs face £5.2 billion deficit by 2030, risking service cuts and tax hikes
An analysis shows that by 2030 the 33 London councils will be short of £5.2 billion, with several already relying on emergency government loans and preparing to raise council tax above the usual 5% cap.
A recent analysis projects that London’s 33 local authorities will face a combined £5.2 billion deficit by 2030, exposing more than six councils to the risk of bankruptcy. Nine boroughs, including Barnet, Croydon and the City of London, are already drawing on Exceptional Financial Support to secure emergency loans and keep their budgets balanced. Ministers have granted five boroughs - Kensington and Chelsea, Westminster, City of London, Wandsworth and Hammersmith and Fulham - permission to raise council tax by more than the standard 5% limit.
The cross-party London Councils warns that daily spending of £5.5 million on housing for homeless families is straining finances, forcing potential cuts to services such as parks, cultural programmes, youth initiatives, housing and health. The City of London received £2.65 million from the fund to ease pressure on its Housing Revenue Account. While the government’s Fair Funding Review raised some boroughs’ allocations, it also reduced the capital’s overall share, forecasting a 17% drop in real terms by 2028. Officials argue that devolving additional fiscal powers to London could help close the widening funding gap.
Why it matters
London's fiscal crisis could lead to major cuts in public services and higher taxes for millions of residents.
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