We're on financial cliff edge, say council leaders as Cash crisis deepens

LONDON’S town halls have warned they are “teetering on a financial cliff edge” that threatens to drag them into bankruptcy and put local services at risk.

- Rachael Burford

Croydon has already declared bankruptcy three times since 2020, while independent-run Havering has said it is on the brink despite cutting spending — including plans to dim street lighting, cancel Christmas decorations and review bin collections.

It is feared other town halls across London could follow suit, with nearly one in five council leaders in England warning that their boroughs could become insolvent in the coming year, according to the Local Government Association. Council tax payers are facing a surge in bills as councils try to plug the shortfalls in their budgets, with council leaders blaming the financial crisis on sky-high social care costs and rocketing homelessness.

All but two of the capital’s 32 boroughs are forecasting an overspend in their original budget plans this year because of increasing costs, according to crossparty umbrella group London Councils. The majority have said they will need to dip into reserves to continue providing services.

Lambeth council leader and deputy chairwoman of London Councils Claire Holland said: “This crisis is driven by demand for local services shooting up while the Government has underfunded those services for many years — leaving boroughs to plug the gap as best we can.