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Your weekly London local government update

06 Aug 25

Proposed reforms to children’s services funding ‘dramatically underestimate’ need in London

London boroughs are calling for the government to reexamine proposed changes to the way it assesses need for children’s services, as research suggests the reforms fail to account for housing poverty when calculating deprivation and could have a “devastating impact” on budgets.

Joint analysis from the National Children’s Bureau and Public Alchemy, commissioned by London Councils, found "serious issues” with the proposed Children and Young People’s Services (CYPS) relative needs formula and concluded that its robustness and accuracy are questionable.

London Councils estimates that the overall impact of the proposed reforms (factoring in all formula changes) mean London boroughs would ultimately receive £700m less than they would under current funding arrangements.

Chair of London Councils, Cllr Claire Holland ( [link removed] ), said: “We welcome the government’s intention to reform council funding since this is long overdue, and it is critical that funding is distributed fairly and efficiently on the basis of need.

"However, it’s clear there are serious issues with the proposed children’s services formula, which risks dramatically underestimating levels of need in London and other parts of the country. This would have a devastating impact on our ability to deliver vital local services, particularly for our most vulnerable children and young people.

“A more accurate approach to assessing local levels of need is in everyone’s interests. It will help create a funding system that is robust, provides councils with the resources they need and – following 14 years of structural underfunding – restores long-term financial stability to boroughs and the wider local government sector.

“The consultation is an essential opportunity to reexamine the formula, and we are keen to work with the government to develop a model that is accurate and robust.”

While, outside the capital, London can be perceived as being financially healthy, in reality boroughs and Londoners are struggling with the highest rate of poverty in the country (once housing costs are factored in); with nearly one in four boroughs relying on ‘exceptional financial support’ to stay afloat - and by far the largest funding gap of any region, with an estimated funding shortfall of at least £500m this year.

London Councils is urging the government to ensure its Fair Funding Review 2.0 proposals distribute funding to local authorities fairly and efficiently on the basis of need. You can read our briefing on the Fair Funding Review 2.0 in full here. ( [link removed] )

Case studies in prevention

To celebrate 60 years of the London boroughs, each week, London Councils is sharing prevention case studies highlighting how preventative action by London boroughs is helping to save money and improve the lives of their residents.

This week, our case study is from LB Hounslow where the development of a Population Health Management  framework has helped improve health outcomes and address inequalities in the borough’s diverse communities through multi-agency preventative engagement.

You can read Hounslow's case study in full on our LinkedIn page here. ( [link removed] )

By election result

A by-election took place in LB Barking and Dagenham's Thames View ward last week (31 July). The by-election was won by Lucy Lee (Labour). You can read the result in full here. ( [link removed] )

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In the news this week...

London Councils says government dramatically understimating the funding needed to support vulnerable children
BBC Radio London ( [link removed] )

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Councils warn new funding formula will ‘devastate’ children’s services
The Standard ( [link removed] )
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Councils warn new funding formula will ‘devastate’ children’s services
LBC News ( [link removed] )
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London 'could lose £1.5bn in children's services funding reforms'
Children & Young People Now ( [link removed] )
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London Councils publishes guidance on cross-pavement EV charging solutions
TransportXtra ( [link removed] )
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London Councils is the collective of local government in London, the 32 boroughs and the City of London.
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