London Councils chair criticises ‘Fair Funding Review’ proposals

Taking money from London councils to redistribute to local authorities across the country is not the solution to the current funding crisis, a Labour council leader has said.

Cllr Stephen Cowan, who leads Hammersmith and Fulham and sits as the chair of the cross-party London Councils group, took aim at his own party for so-called “fair funding” reforms.

The government policy, intended to redirect cash from more affluent boroughs to those in need, has hit authorities in the capital particularly hard, regardless of political affiliation.

Hammersmith and Fulham, Westminster, Kensington and Chelsea, Wandsworth, and the City of London have all been granted permission to increase council tax by more than five per cent next year in light of a likely reduced government settlement.

The West London borough has said its own share of central funding will fall from £150.5mn in 2025/26 to £72.4mn over the next four years, leaving an estimated £160mn budget gap.

Meanwhile, on Tuesday 20 October Westminster City Council announced it will cut 520 jobs from its workforce due to a projected funding shortfall.

Cllr Cowan took aim at the reforms during a fringe event hosted by London Councils at last month’s Labour Party Conference.

“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 had pursued a “ruthless financial efficiency programme” which gives constituents “maximum value for money” already.

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.”

The Mayor did not respond to this 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.”

Kensington and Chelsea, Westminster and Wandsworth councils have already written to ministers to ask them to rethink the new formula. The City of London Corporation has also said it will consider an appeal.

In response, a spokesperson for the Ministry of Housing, Communities and Local Government said: “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.”

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