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Outer London boroughs fear squeeze in fair funding review

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Outer London borough leaders fear their finances will be disproportionately squeezed as a result of the fair funding review.

Numerous figures from other regions have told LGC London’s councils should take a greater hit so some funding can be distributed around the country to areas that lack some of the capital’s advantages. 

While inner London boroughs have benefited from major economic growth, the boroughs on the outskirts of the city say they have not seen the same uplift while at the same time the pressures generated by children’s and adult services have greatly increased. 

These include dealing with rapid population growth, a lack of school places, increasing numbers of children with special educational needs, a rising number of elderly people requiring care, as well as increasing costs associated with no recourse to public funds and unaccompanied asylum seekers.

Bromley LBC leader Colin Smith (Con) told LGC outer London boroughs like his “cannot continue to muddle through” and expressed concern the fair funding review could hit them hardest. While the shire counties had “organised themselves brilliantly”, Cllr Smith said “there’s not a common line” among London’s 32 boroughs and City of London Corporation.

“Everyone agrees it would be nice to have more money for London but those who are already getting the enhanced rateable grant from government are invariably of a different political hue from those in the outer areas,” he said.

“[Outer London boroughs] would say if there’s anything extra coming to London we should be first in the queue, which is then offset by an equal determination from those currently getting it to not give it up.

“There is a danger that because London is not necessarily speaking with one coherent voice that we get squeezed which is a worry because we don’t know where the impact will fall.”

Bromley finance director Peter Turner said: “The issue for local government is the need to argue more over the quantum… I worry whoever shouts the loudest is not going to help others.”

Croydon LBC leader Tony Newman (Lab) hoped the fair funding review would address “historic inequalities for outer London boroughs” but added he was “deeply concerned” about the outcome.

“The fear is it will not do that [address historic inequalities] and it will see London as one piece,” he said.

Cllr Newman said Croydon was “chronically underfunded” – his borough received £227 per head in 2018-19 whereas Westminster City Council got £505 per head.

Barking & Dagenham LBC leader Darren Rodwell (Lab) said the system was “unfair already” and warned the government against diverting even more money away from the capital.

“If the government is so short-minded to allow that to continue then London, which is the country’s cash cow, will fall over because it’s in the outer London boroughs where the change [and growth] is happening… If they redistribute and make it even more unfair then something has got to give.”

While Teresa O’Neill, leader of Bexley LBC and London Councils’ finance lead, said London’s business rates retention pool had been “good” for all boroughs – a £47m uplift was recently redistributed to fund eight major projects across the capital – she said there were question marks over whether it would continue in its current form due to the government no longer pursuing 100% rates retention.

Housing and communities secretary James Brokenshire is also MP for Old Bexley and Sidcup. Cllr O’Neill said she had spoken to Mr Brokenshire about London’s plight.

“I think the government are listening, but I think they are listening to all of us,” she said.

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