This week, the Chancellor of the Exchequer, Rt Hon Rachel Reeves MP, will report the outcome of the 2025 Spending Review. Ahead of this our Leader, Councillor Baroness O’Neill of Bexley OBE, and Director of Finance and Corporate Services, Ross Brown, wrote to her setting out the London Borough of Bexley’s position.
Below we have published their letter, sent on 29 May 2025:
London Borough of Bexley
Civic Offices
2 Watling Street
Bexleyheath
DA6 7AT
11 Downing Street
City of Westminster
London
SW1A 2AA
29th May 2025
Dear Chancellor
We write further to our letter dated 5th August congratulating you on your election and setting out the London Borough of Bexley’s asks.
We have big aspirations for Bexley and rightly so, and to deliver these, the London Borough of Bexley has worked in partnership to create a 2050 Vision for Bexley. This vision is a long-term and ambitious plan for the borough, that sets a clear direction of travel and recognises the key role all partners play in the success of Bexley. The Bexley economy can be a bigger driver for the London and national economies. We want to work with your Government to unlock that potential but we need to ensure we have a stable financial platform from which to deliver.
Bexley is an efficient, effective and well-run local authority. Our services are highly rated, including our twice ‘Outstanding’ Ofsted rated children's services, our innovative adult social care work, and our award-winning parks and open spaces.
We have delivered this despite Bexley being significantly underfunded. We receive 48% less grant funding than our nearest statistical neighbour Ealing, and 49% less than neighbouring Greenwich. We have the sixth lowest value of funding grants, and the ninth lowest Core Spending Power in London.
We continue to face considerable financial pressures, with the long-lasting challenges caused by the pandemic, new burdens from central government, and the ongoing impact of inflation.
Our population is growing and changing, with complex needs rising and pressure on social care services putting us under strain.
Despite this, through instilling excellent financial grip, the London Borough of Bexley delivered a balanced budget in 2024/25 using exclusively its own resources.
As you will expect, we take our fiduciary responsibilities seriously and although complying with the legal duty to set a balanced budget is not in itself of note in general, 30 Councils in the UK including 6 in London (totalling £377.9m) had to use Exceptional Financial Support to set a balanced budget. The London Borough of Bexley set a balanced budget for 2025/26 without the need for Exceptional Financial Support and intends to continue to do so in future years.
However, we continue to be reliant on Government funding, and as well as needing a supportive relationship with Government, for the London Borough of Bexley to continue to set lawful balanced budgets it is vital that the Council receives positive settlements without an erosion in Core Spending Power and without a pass through to our hardworking Council taxpayers.
We need a positive Spending Review outcome and fair funding
We have previously submitted our Productivity Plan to the Ministry of Housing, Communities and Local Government, where we detail how we are delivering efficiency, productivity and value for money.
We echo the LGA and London Councils in asking for the new Government to establish multi-year financial settlements to local authorities.
We read with interest the local authority funding reform - ‘Objectives and Principles’ - consultation published 18th November 2024 and we note that the detailed consultation will be issued in the coming months. It is critical for this work to be completed urgently and concluded as a priority.
The local authority funding reform – ‘Resetting the Business Rates Retention System: technical consultation’ gives us an insight into the wholesale changes being proposed. It is imperative with such a significant change, that this work is concluded in a timely manner and that great care is taken in its introduction, particularly regarding the Business Rates Baseline. We would also expect that careful consideration is given to transitional arrangements, if required. Moreover, this consultation must not be seen as a further opportunity to reduce the funding allocation to the London Borough of Bexley, which, at present, places 21.6% of its funding reliance on Business Rates funding.
The forthcoming Spending Review, currently scheduled for 11th June, is a crucial point for all Councils, and specifically for the London Borough of Bexley as it strives to ensure its long-term financial sustainability. The London Borough of Bexley asks that the Government gives careful consideration to the overall expenditure limits being determined, to ensure that the Council has a suitable funding envelope, both for 2026/27 and for future years, that appropriately reflects the multitude of demand and inflationary pressures being predicted and allows us to address the long-term challenges faced. Sustainable funding allocations will allow the Council to continue to pursue its long-term prevention and early intervention strategy and reduce the need to take short-term decisions simply to comply with the legal duty to set a balanced budget. The economic challenges facing the country cannot be addressed by a reduction in departmental spend that is passed through to Local Government. The funding allocations must reflect not only the vital role the London Borough of Bexley plays now, but also in the future to allow it be even better in service of our residents and customers.
Put simply, the Government must ensure that after adjusting for inflation, the London Borough of Bexley receives real increases in its Core Spending Power without that increase coming from levying our residents through ever higher Council Tax levels. We need real term increases.
We also take this opportunity to suggest that through the Spending Review and subsequent Local Government Finance Settlement, that the Household Support Fund is moved from its year-by-year approach into a base funding position which would allow us to use the funds for long term and sustainable benefit.
The new Government’s vision for the future of the children’s social care system, education services and core related legislative proposals in the form of the Children’s, Wellbeing & Schools Bill presents a real opportunity for sector reform. London Borough of Bexley's ‘outstanding’ rated by Ofsted Children's Social Care Services means we are well placed to deliver these reforms at pace, but the Government must ensure that ability of the Council to deliver is supported with appropriate new funding. This funding needs to be sustainable and delivered as a new core funding stream, removing the reliance on one off or short-term funding often announced at comparatively short notice.
We specifically ask that the Government revisits the proposed changes to the Children’s services formula contained in the Needs Formula, which at present suggests a decrease in funding allocation at a time of significant new burdens and complex change. Alongside this, we ask that careful consideration is given to the alternation of any funding formula element that has the potential to change the Council’s core funding position.
We welcome the ‘Fix the market’ pillar in the Bill, and we would like to see a change to make the market for Children’s Services placements not-for-profit, as seen in Scotland and Wales. With the increasing demand for Private Voluntary and Independent (PVI) placements, and limited supply, the market can dictate its price, with new placements regularly costing over £8,000 per week. Our budgets simply cannot fund this, and it places a significant sustainability risk for the Council.
As you are aware, Bexley is also part of the Safety Valve for its Dedicated School Grant (DSG) and its SEN provision. Whilst the Council is grateful for the current funding, the Statutory Override for the deficit ends on 31 March 2026, whilst our DSG is not planned to come out of deficit until the financial year 2028/29. With the challenges of increased demand, higher inflation, loss of income, high energy costs and the cost-of-living crises hitting our residents hard, the Council has an overspend of £8.664m last year, which was funded from reserves. If there is not additional funding forthcoming to support the increasing number and complexity of EHCPs, then as a minimum, the Statutory override needs to be extended for a period of up to three years. However, the Statutory override is only a temporary solution at best to a more fundamental and long-term challenge. To stop the situation from developing into an even greater longer term financial challenge, new funding is needed within the DSG to help put the London Borough of Bexley in a position that allows it fund sustainably the associated costs.
Housing remains crucial and a real priority for our borough. As an immediate step, government should fundamentally overhaul how temporary accommodation works. The current system sees different parts of government competing against local authorities for an ever-dwindling stock of private rented properties. It is driving up prices and leaving us without any housing available in our own borough, placing new burdens on landlords, and driving them out of the market. This benefits no one, least of all people who are homeless.
New pressures and cost shunting
It is important for the Council to raise, and for Government to recognise, both the current and forthcoming impact of several recent changes. The recent introduction of the increase in National Insurance Employers Contributions has resulted in a financial pressure on our budgets (in excess of the additional grant received), compounded by the new National Living Wage requirements. When combined with the potential financial implications of the forthcoming Employment Rights Bill and the Children's Bill it further strengthens the ask for new additional funding.
We would like to again extend an invitation to you to visit the borough, meet with our partners, and see how we are tackling challenges across the Borough in a financially responsible manner whilst making Bexley even better.
Yours sincerely,