Some of London’s poorest boroughs could see their share of children’s services funding cut by half under Labour’s proposed reforms to local government grants.
The New Funding Formula (NFF), currently under consultation, would overhaul how money is allocated to councils across England.
Ministers argue it would redistribute funding towards more deprived areas, particularly northern cities that faced major austerity cuts. However, London leaders warn the plans would have a disproportionate and damaging impact on the capital.
Research by the Institute for Fiscal Studies last month showed that councils including Camden, Hammersmith & Fulham, Kensington & Chelsea, Wandsworth and Westminster would lose more than a quarter of their overall funding in real terms over the next three years. Even the maximum council tax rises permitted would only cover about half of the shortfall.
Fresh projections from London Councils, the representative body for local authorities, reveal the deepest cuts yet. Their analysis shows that some boroughs’ share of national funding for children and young people’s services would be halved compared with the current formula, introduced in 2013/14.
The steepest reduction would hit the City of London Corporation, whose allocation would drop by 73 per cent. But many larger boroughs with high levels of deprivation would also face drastic cuts:
• Haringey: down 52 per cent
• Lewisham: down 51 per cent
• Brent: down 50 per cent
• Redbridge: down 49 per cent
• Kensington and Chelsea: down 48 per cent
• Newham: down 48 per cent
Karen Buck, the former Labour MP for Westminster North, told PoliticsHome: “The proposed changes to the funding formula effectively increase resources for children and young people in one part of the country by removing resources from children’s services in London.”
She added: “Yet I find it incomprehensible that anyone could look at the cost pressures and complex needs facing London boroughs and decide that their children’s services are overprovided or overgenerous, especially given spiralling costs in other areas, such as homelessness.”
A joint report by the National Children’s Bureau and Public Alchemy, commissioned by London Councils, warned that a 10 per cent funding cut would force boroughs to reduce early intervention services, family hubs and preventative work. A 20 per cent cut, it said, would have a “colossal impact” on their ability to deliver even statutory services.
James Shutkever, social care programme lead at the National Children’s Bureau, said: “The new proposed formula risks underestimating the level of need in local authorities across the country and could halve the funding that some London councils receive for vital support for children, young people and families.”
London Councils argue that the formula ignores key cost drivers, particularly housing, and relies on flawed measures of deprivation such as parental qualifications and subjective health metrics. They stress that London continues to bear a significant share of national child protection and children-in-need caseloads, contrary to assumptions behind the reforms.
Claire Holland, chair of London Councils, warned: “After more than a decade of structural underfunding, London boroughs face funding shortfalls in the hundreds of millions, growing reliance on Exceptional Financial Support and unsustainable overspends in areas such as homelessness, adult social care and children’s services. Against this backdrop, the proposed children’s services funding formula risks dramatically underestimating need in London.”
Waltham Forest Council, for instance, would lose 46 per cent of its national allocation under the NFF despite overspending its children’s social care budget by £8m in 2024/25. Grace Williams, leader of Waltham Forest Council, said: “We are hugely concerned that under the proposed new funding formula, Waltham Forest would lose much-needed funds. We are particularly concerned that housing costs are not factored in when considering deprivation, that eligibility for Free School Meals is being undercounted, and that the rationale for some of the changes that have been made to the original formula is not clear.”
Neither the Department for Education nor the Ministry for Housing, Communities and Local Government responded to requests for comment.
