London councils expect inflation to burn £400m hole in finances amid cost of living crisis
London boroughs are expecting inflation to burn a £400m hole in their finances, according to a local government association.
London Councils, the cross-party organisation which covers all 32 London borough councils and Canada, said today that rising inflation has cut £100m from the financial uplift boroughs received for 2022-23.
Inflation levels, currently at a 40-year high of nine per cent, is expected to hit 11 per cent by the end of this year.
London Councils have since called on the government for more support, as the cost-of-living crisis is expected to see more Londoners reliant on council services.
The inflation-induced losses also risk jeopardising London’s recovery, the councils said.
With unions recently setting out a 10 per cent pay claim, the councils added that the cost to pay bills is likely to exceed the two per cent on average boroughs budgeted for this year.
“Eye-watering inflation means our funding has effectively been cut by £100m already this year – and overall we face £400m of additional budget pressures,” London Councils chair Georgie Gould said. “Just as we did during the pandemic, councils are stepping up to support their communities and provide a vital safety net.
“We want to continue to offer this support but without an increase in grant funding in line with inflation and, above all, funding certainty for the next two years, councils will be forced to make reductions to services, impacting those residents who need them most.”