The government's Fair Funding Review is taking significant sums from London councils to redistribute relatively small amounts to other areas, and is not the answer to the current local government funding crisis, according to the Labour leader of Hammersmith and Fulham Council.
Cllr Stephen Cowan, who also chairs the cross-party London Councils group, criticised the policy at a fringe event hosted by London Councils at last month's Labour Party Conference. The review, intended to redirect funding from more affluent boroughs to those in greater need, has hit authorities across the capital particularly hard, irrespective of their political control.
Funding cuts and job losses in the capital
Hammersmith and Fulham has said its share of central funding will fall from £150.5 million in 2025/26 to £72.4 million over the next four years, leaving an estimated £160 million budget gap. The borough, along with Westminster, Kensington and Chelsea, Wandsworth, and the City of London, has been granted permission to increase council tax by more than five per cent next year in light of the likely reduced government settlement. The standard maximum increase without a referendum or special permission is 4.99 per cent.
On Tuesday, October 20, Westminster City Council announced it will cut 520 jobs from its workforce due to a projected funding shortfall. Kensington and Chelsea, Westminster and Wandsworth councils have already written to ministers to ask them to rethink the new funding formula, and the City of London Corporation has said it will consider an appeal.
Cllr Cowan: 'The solution is not fair funding'
Cllr Cowan expressed sympathy for the government's position but argued the mechanism is flawed. "I am extremely sympathetic to the situation the government's in - I don't think a government's inherited a worse position," he said. "I'm sympathetic to it, but I simply don't think the solution is fair funding. It doesn't raise that much money, and you're taking a lot of money off some councils to give a little bit to others. So I don't think that's the solution in the end."
He said his authority has already pursued a "ruthless financial efficiency programme" to give constituents "maximum value for money".
Mayor urged to lobby for a fairer deal
Last year, the London Assembly unanimously passed a motion calling on Sir Sadiq Khan to "urgently lobby the government to reconsider its Fair Funding Review proposals, reverse its planned funding cuts to London boroughs, and ensure that London receives its fair share of funding to meet Londoners' needs."
Sir Sadiq did not respond directly to the motion, but said last November: "I want to reassure Londoners that I will continue to work closely with London Councils and others to make the case for London getting a fairer funding deal as part of this process."
A spokesperson for the Ministry of Housing, Communities and Local Government responded: "Local authorities decide the level of council tax they wish to set, but we are clear that in doing so they should put taxpayers first. We've made over £78bn available for council finances next year, with the majority of money un-ringfenced so local leaders can decide how best to spend on their local priorities. And we're fixing an outdated funding system so funding goes where need is greatest, while protecting councils through the transition and ensuring no area faces a cliff edge."
