Labour government cuts to London funding could punch a £25 million hole in Greenwich Council’s finances by 2029, councillors have been told.
The warning came as it was revealed that the council has already overspent its budget for this year by more than £15.7 million – with the possibility of new cutbacks coming soon.
Conservative cuts between 2010 and last year led to £150 million being taken away from Greenwich during those 14 years.
But the Labour-run council now faces losing out further under its own party’s plans for “fair funding” of councils across England. The reforms, if implemented as planned, would take cash away from inner London councils and redistribute it elsewhere, including some outer London boroughs.
Neighbouring Bexley has long complained about getting less funding than Greenwich, while crisis-hit Croydon – which is being run by government commissioners after years of financial problems – receives much less than next-door Lambeth.
Greenwich would be among the losers if the scheme goes ahead as planned, losing £24.7 million by 2028/29, a document for next week’s cabinet meeting reveals.
The medium-term strategy update shows the depth of the financial jeopardy facing Greenwich, with the council forecast to have a £45.1 million budget shortfall next year – growing to an unmanageable £136.8 million by the end of the decade.
“Action will need to be taken in the upcoming months to balance the 2026/27 budget,” the paper warns – hinting at more cuts coming soon.
The exponential growth in costs for adult social care and children’s services account for much of the shortfall. Governments have put off adult social care reform for many years, although Labour has now set up a commission into the issue, while councils across England have called for more help for children’s services.
Earlier this year, councillors were told that finding secure accommodation for just one young person can cost £20,000 per week – working out at £1 million a year, or the takings from a 1 per cent council tax rise.
Even the growth in new homes does not provide much relief to the council’s finances – only adding about £1.4 million next year, with a total of £6.1 million by the end of the decade.
The government has previously said that its proposals are “decisive action to reform the funding system so we can get councils back on their feet and improve public service”.
The council is already struggling with many parts of the cuts package passed earlier this year, with this year’s budget already overshot by £15.7 million, another paper to be discussed by the cabinet shows. A reduction in street sweeping was delayed due to “governance issues”, costing £900,000 alone. Plans to cut library services have been delayed, costing £165,000, with the “complexity of negotiations” with GLL, which operates the borough’s libraries, blamed.
About £3.8 million can be clawed back through council tax credits, business rates and profits from its subsidiary GS Plus – profits that were used to secretly bail out Woolwich Works two years ago.
As for the rest, the report warns that the council will need to sell assets, dip into the cash it receives from developers or use its cash reserves to help make up the shortfall – but those reserves now only stand at £18.7 million.
Last month it was revealed that the council’s debt had grown by more than £900 per resident over the previous year, although much of this relates to increased council-house building, which is accounted for separately.
Matt Hartley, the Conservative opposition leader, said: “After spending years on their loud, performative and completely ineffectual campaigning against the previous government, why is it that this year Labour councillors have not made a peep about the Labour government’s plans to cut Greenwich Council funding by £24.7 million over the next three years?
“These reports lay bare the shameless hypocrisy at the heart of this Greenwich Labour leadership, which has shown time and again they will always put their own party political interest above the interests of local taxpayers.
“Even worse, the council is struggling to deliver its own existing and belated efficiencies programme as it is. This year’s budget is overspent by more than £15 million just three months into the year – and this week’s ominous warning of ‘in-year measures’ being required show just how out of control the council’s finances are.
“Labour councillors need to get a grip of this situation and fast, or local people are going to pay an even higher price for their abject failure to tackle the waste and inefficiency that we have been warning about for years.”
The issue will be discussed at a cabinet meeting on Tuesday.
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