The slow unravelling of the city’s community heart
London’s councils are facing a widening £4 billion funding gap over the next four years, according to new analysis from London Councils and the Society of London Treasurers. Over the next four years, this shortfall could drive around half of the capital’s boroughs to seek emergency financial support (EFS) to avoid the cliff edge of bankruptcy (Section 114) — enough to make even the most seasoned council accountants fall to their knees in despair.
This year alone, seven London boroughs — Croydon, Newham, Barnet, Enfield, Havering, Haringey, and Lambeth — have already requested EFS, signalling a significant potential domino effect across the capital.
The government’s Fair Funding Review 2.0 — a reform of how national funding is shared among councils — fails to reflect London’s higher living costs, deeper deprivation, and the true cost of delivering essential local services.
As belts tighten, councils are being forced to make ever finer cuts to the services that hold communities together. Services such as leisure centres, children’s centres, and libraries now face the risk of reduction or closure as councils manage growing financial pressures. These pressures threaten to unravel years of work that have helped Londoners live active, connected lives.
Without urgent action, the gradual erosion of community spaces could leave London less healthy, less cohesive, and less resilient. To protect the city’s future, we must rethink how we value and fund the places that bring people together — the parks, leisure centres, play spaces, and local projects that give life to our neighbourhoods and help London thrive.