Local authorities in London are facing additional budget pressures of £400m due to the rapid increase in inflation, according to an analysis by London Councils.
The representative body for the capital’s 32 boroughs and the City of London said the councils had originally planned for an inflation impact of £300m in revenue budgets for 2022-23, but this was now estimated to be closer to £700m overall.
London Councils said that rising inflation had also cut £100m in real terms from the £330m financial uplift received by the boroughs in the local government settlement for 2022-23.
Cllr Georgia Gould, chair of London Councils, said: “Eye-watering inflation means our funding has effectively been cut by £100m already this year – and, overall, we face £400m of additional budget pressures.”
The analysis suggested that local authorities’ running costs for maintaining current services will be up to £300m higher due to the increase in inflation. The study also stated that construction contract expenses for some projects have risen by 20-25%.
The inflationary pressures are being felt most acutely in adult social care, which for some boroughs represents 70% of their controllable budgets.
Gould called for additional government funding to support councils with the rising costs. She said: “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.”
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