The leader of one of London’s best-run councils has warned of a "2028 sell-by date" for the local authority as financial pressures mount.
Colin Smith, the Conservative leader of Bromley Council in southeast London, said local government stands at a “crossroads” with many facing effective bankruptcy in the next Parliament unless their funding is reformed.
It comes as Deputy Prime Minister Angela Rayner looks set to create a “progressive” new town hall funding formula, which will see grants redistributed depending on local needs.
The changes, which will be phased in over three years from 2026, are expected to reduce cash received by wealthier authorities in London to support deprived areas of the North.
Economists from the Institude for Fiscal Studies have warned that “leafier” suburbs could be hit hard with a 5 per cent council tax bump from Labour’s reforms.
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There are also concerns that the amount Londoners pay to the Mayor of London to fund the Metropolitan Police will also be hiked.
This is coupled with boroughs in the capital receiving around 28 per cent less funding per Londoner compared to 2010, according to research.
While some English authorities such as Croydon have issued Section 114 (bankruptcy) notices, in which they cannot balance its budget and must cease new spending commitments, Bromley was the only area of London whose council was able present a balanced budget in 2025.
But Mr Smith said councils like his are being spun on a “conveyor belt of doom” and predicted that spending in areas such as social care for elderly residents and SEND support will soon outpace its reserves.
In an interview with The Standard, Mr Smith confirmed that council tax is set to increase by the maximum 5 per cent legal limit to pay for “popular services”, adding that “every single budget line is being looked at” amid a future deficit of £34million.
The current system is broken
“We are getting slowly edged closer towards that cliff face that you see some of the less organised and irresponsible councils that have already fallen over,” Mr Smith said. “We are watching with huge trepidation.”
Mr Smith, who had led Bromley since 2017, also accused Labour, as well as his own party and the Liberal Democrats from their tenures in government, of having “blood on their hands” over long-term cuts to services.
London Councils, which acts as the collective voice for London’s 32 local authorities and the City of London Corporation, previously said that outer suburbs face “a particularly tough outlook”.
The cross-party group said boroughs such as Bromley are among “the lowest funded per capita in the country”, with growing populations who are becoming more deprived.
Bromley’s budget for 2025/26 already includes £148 per head of population in grant funding from Whitehall, significantly lower than the London average of £382.
Mr Smith said: “There’s no upside anyone can see. There’s widespread agreement across all persuasions that the current system is broken. We repeat cost-cutting exercises every year to see what we can try and drag it out if it. Everyone is doing their best to try and keep costs down… but there is absolutely nothing more to cut. The direction of travel is undeniable.”
In February, The Standard revealed that seven London councils applied for emergency government cash this year to balance the books, up from two in 2024.
Local government minister Jim McMahon claims Labour’s new formula would hand "around £2billion of funding to the places and communities that need it most".
"The current funding system is a decade old and reinforces the divide between deprived places and the rest of the country," he added.
Ms Rayner, standing in for Sir Keir Starmer at Prime Minister’s Questions on June 25, responded: “We are fixing the foundations of local government after 14 years of austerity that was inflicted with the aiding and abetting of her party.”
