Bin collections under threat in some London boroughs from town hall funding cuts, warn business leaders

Bin collections under threat in some London boroughs from town hall funding cuts, warn business leadersBosses warn London will be particularly badly hit by the controversial reforms

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Bin collections in London risk being cut back as Government funding for some councils is reduced under controversial reforms, business leaders are warning.

They have written to Business Secretary Peter Kyle urging him to intervene to lessen the blow to town halls in the capital.

Ministers are changing the way funding is allocated in a move which is set to funnel more money to the North and Midlands.

The reforms, set to come in next April, are expected to particularly hit councils in central London which have kept council tax low, a few in outer London, and town halls in the wider South East.

The letter to Mr Kyle, organised by business group BusinessLdn, stressed: “Boroughs will of course prioritise their statutory responsibility to protect their most vulnerable residents, including adults and children in need of social care and homeless families.

“This means the impact of further funding constraints will inevitably hit visible services boroughs deliver and on which local businesses depend such as planning, economic development, street cleaning and refuse collection.”

Councils in London are unlikely to cut bin collections ahead of the local elections next May.

But they are facing growing financial constraints as they seek to fulfil increasing statutory duties, on top of the other services that they provide.

Rubbish piled in a street off Brick Lane during a strike by Tower Hamlets refuse collectors in 2023Getty Images

Some of them are already making changes to council tax to try to balance their books.

The letter added: “The Government’s ambition to make the local government funding system simpler, more stable and fairer is long overdue and welcome.

“However, the methodology being used in the Fair Funding Review 2.0 risks exacerbating the unprecedented financial pressures that London councils, and particularly inner London boroughs, are facing.”

The letter was signed by John Dickie, chief executive of BusinessLDN, Dee Corsi, chief executive of the New West End Company, Alex Jan, chair of Central District Alliance BID, Ros Morgan, chief executive of Heart of London Business Alliance, Brendan Kerr, executive chairman and owner of Keltbray, Faraz Baber, chief operating officer at Lanpro, and Ian McDermott, chief executive of Peabody and Chair of the G15 group of London housing associations.

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Together, they represent more than 1,000 businesses in the capital.

Business Secretary Peter Kyle who is being urged to intervene to stop London councils being so hard hit by funding reformsPA Wire

London Councils, which represents town halls, has warned that they face a £1 billion funding gap this year, having had to overspend by £800 million last year to meet demands for their services.

The business leaders stressed that nearly a quarter of London boroughs are now reliant on emergency borrowing to balance their budgets, meaning it is the worst hit region in the country.

“The Government’s proposed funding reforms are poised to make this unsustainable financial outlook even worse,” the letter added.

Ministers recently amended the reforms, started under former Communities Secretary Angela Rayner, so that they do not hit some London councils so hard.

Housing costs, which make up a small proportion of the overall deprivation “score” at present, will be a larger role in calculating how much money an authority receives, according to reports.

Former Communities Secretary Angela RaynerPA Wire

Since the cost of housing in London is significantly higher than other regions, with the average property price-to-earnings ratio being about 1.5 times the UK average, this will make the capital appear more deprived and thus generate more funding.

A Communities Department spokesman said: “We have made £69 billion available for council finances and will fix the outdated and unfair funding system we inherited, so funding finally matches local people’s needs and councils can deliver better public services.”

The reforms aim to ensure that people “in areas previously left behind” will get the “vital public services they deserve” from their local town hall.

Some councils in more deprived areas of London are expected to benefit.

The new funding allocations from the Government are set to be phased in over three years, with a “funding floor” to limit the impact of cuts in some but not all councils.