Running on Fumes: London Council Services in Austerity

Ahead of the Autumn Statement, we take a look at how London boroughs’ spending has changed and look ahead to the potential impact of the next phase of cuts.

Public services in London face tough times. The capital’s population and their needs continue to grow, and we are roughly half way through a period of significant reductions in public spending.

Over the past five years, London boroughs have absorbed real terms funding cuts of 44 per cent. London local government has shown resilience and ingenuity in absorbing funding reductions, but the next round of cuts, may be tougher.

Budgets that have been particularly heavily hit include cultural services, housing support, and planning and development, while social care has been less affected to date. In other cases, like highways and transport, revenue generation has helped cushion cutbacks.

Key findings

  • Discretionary services, like economic development, cultural services and housing support, have been cut back, sustaining total cuts of around £500m, just over 20 per cent of the 2010/11 expenditure levels.
  • Social services have seen lower reductions in spending overall, but have seen convergence between different boroughs, with higher spending boroughs spending less, suggesting retrenchment to a core set of services.
  • Efficiency savings have been sought across the board, with reductions in central operating costs, and experimentation with joint commissioning and management structures.
  • Where there is scope to support services through raising revenue, this has been pursued. The use of planning performance agreements helped support planning departments, and parking and parking enforcement revenues are rising across London, particularly in the central boroughs, helping to offset the costs of highways and transport services.