London Councils and Budget 2026: ‘exciting opportunities’ for devolution and growth, but £5.2 billion funding gap ‘looms large’
The prospect of the government devolving more powers and resources could bring “exciting opportunities” to the capital, London Councils has declared. In its submission to the Autumn Budget, the cross-party group highlights the many priorities boroughs share with the government – including building council housing, helping more Londoners into work and generating good growth in every postcode. Through more fiscal autonomy for London and local government, boroughs emphasise that faster progress can be made achieving these ambitions. However, London Councils also warns of a growing funding gap in town hall budgets that threatens to destabilise local services and undermine delivery. London Councils’ latest analysis of local government finances in the capital forecasts up to a £1.2 billion funding gap this year (2026-27). London boroughs face a cumulative budget shortfall of £5.2 billion between now and 2030. Boroughs in the capital remain disproportionately reliant on emergency borrowing to avoid bankruptcy through the government’s Exceptional Financial Support (EFS) scheme. Nine of London’s 33 local authorities receive EFS. Cllr Stephen Cowan, Chair of London Councils, said: “The government’s devolution agenda offers exciting opportunities for the capital. “London is a leading global city and the powerhouse of the UK economy, but granting London more autonomy is critical to sustaining this success. “Strengthening London boroughs by devolving new fiscal resources would put us in a much stronger position to tackle London’s challenges, grow the economy, and maximise London’s contribution to the public coffers. The benefits would be felt not only by Londoners but by communities around the country. “Boroughs have a vital role to play, but are too often held back by enormous budget pressures. As we plan how best to invest in local services, to build housing, and to grow our economies, a worsening funding gap looms large over everything we do. For too long, the funding available to us has failed to keep pace with skyrocketing costs and demand for services. “Everyone knows the local government finance system is broken. The upcoming Budget is an opportunity to help stabilise town hall finances, give boroughs more fiscal tools, and support the local delivery we all want to see.” Policy priorities to help boost delivery in London On devolution, boroughs welcome the government’s recognition that strong local authorities are essential to the success of its devolution plans. Boroughs want to play a full and active part in shaping the next stages of London’s devolution journey. London Councils strongly believes that new fiscal devolution powers must apply to local authorities, with the design of devolved fiscal arrangements in the capital jointly decided between the Mayor and the boroughs. Boroughs’ fiscal devolution priorities include ensuring local authorities are able to retain and have a say in allocating at least 50% of revenues raised from an overnight visitor levy, retain more revenue from business rates and business rates growth, and ensure involvement in any new devolved income tax arrangements for the capital. On housing, London boroughs are determined to take the lead in delivering the largest council housing programme since the post-war period. To support this, London Councils is calling for further increases to grant funding, building on the investment previously announced for the Social and Affordable Homes Programme. With one in 50 Londoners homeless and living in temporary accommodation, the housing crisis is having a devastating impact on individuals but also on borough finances. London boroughs collectively spend £5.5m daily on homelessness provision. To relieve homelessness pressures, London Councils is seeking an end to the temporary accommodation subsidy gap through a lifting of the freeze on the Local Housing Allowance (LHA) rate payable for boroughs’ temporary accommodation costs, as well as an uplift of LHA to the 30th percentile of market rents. Almost 1.3 million Londoners are economically inactive, so employment and skills are another priority concern for boroughs. London Councils is asking the government to create a single, multi-year funding pot for all skills and employment support to be co-designed by boroughs alongside the GLA. London’s five Get Britain Working Trailblazers supported more than 6,000 Londoners in their first year. Boroughs are pushing for guaranteed funding for a third year of the trailblazers so that proven programmes due to end next year are not lost to a funding cliff-edge. On infrastructure, London Councils highlights the Bakerloo line extension and West London Orbital as priority transport projects. Boroughs also want London empowered to invest in its own growth by allowing the capital to retain land value uplift generated by infrastructure projects. This would support investment in the next generation of growth-enabling infrastructure. Funding gap analysis According to London Councils’ analysis of data supplied by boroughs, London local government faces a cumulative budget shortfall of £5.2 billion between now and 2030 (2026-27 until 2029-30). This is a worse picture than the £4.7 billion gap identified in October 2025, which itself was more than twice the £2.2 billion shortfall forecast the previous year, showing that the medium-term funding gap is continuing to grow. In the short-term, London boroughs are grappling with an almost £1.2 billion shortfall in this financial year (2026-27). Finance pressures are driven by the fast-rising cost of providing services and growing need from vulnerable Londoners. Adults’ and children’s social care, homelessness, and special educational needs and disabilities (SEND) services continue to see increasing levels of demand. Many of these services are statutory, meaning councils have a legal responsibility to provide them. Because local authorities also have a legal duty to balance their budgets (i.e. they cannot carry a deficit into the next financial year), boroughs will need to deliver savings to address this gap or face using their one-time financial reserves. The government’s 2025 Fair Funding Review improved funding levels for some London boroughs, but saw London’s overall share of national funding for local authorities reduce. After adjusting for inflation, per-capita funding for London boroughs will be almost 17% lower in 2028 than in 2010. Exceptional Financial Support London local government is disproportionately reliant on the government’s Exceptional Financial Support (EFS) scheme compared to other
McLaren Living Secures Green Light for £65m Hackney Co-Living Development
McLaren Living has secured planning permission for a £65 million co-living and affordable housing development at Fish Island in Hackney Wick, paving the way for 324 new homes in east London. The Wansbeck Road scheme will deliver 280 co-living studios alongside 44 affordable homes across two buildings rising to 10 and seven storeys. Occupying the final development plot within the wider Neptune Wharf masterplan, the project will complete a key part of the regeneration of Fish Island and establish a new residential gateway at the junction of Wansbeck Road and Monier Road. Designed by HTA Design, the development has been conceived as a residential-led community combining private accommodation with an extensive range of shared amenities. Residents of the co-living building will have access to a gym, library, cinema and creative studios, together with communal kitchens and dedicated dining and social spaces. At ground-floor level, plans also include a social co-working café and flexible pop-up event space, helping to create greater activity and interaction between the development and surrounding neighbourhood. A landscaped central courtyard will sit between the two buildings, providing shared outdoor space while creating new connections through the site. Sustainability has also been embedded within the design. The car-free development will provide extensive cycle facilities alongside rain gardens and sustainable drainage measures, while rooftop solar panels will contribute towards reducing operational energy requirements. The scheme is targeting a BREEAM Excellent rating, further strengthening its environmental credentials as McLaren Living looks to deliver a high-density residential development designed around sustainable urban living. The combination of co-living and affordable housing also reflects the increasing diversification of London’s residential market, with purpose-designed shared living emerging alongside more established housing models as developers respond to demand for well-connected homes with greater communal and amenity provision. Ed Court, divisional managing director at McLaren Living, said the developer was excited to progress its plans for Wansbeck Road and complete an important remaining part of the Neptune Wharf masterplan. He added that the location represented a significant co-living investment opportunity, supported by a diverse professional population and strong connections to employment, education and leisure destinations across the capital. With planning permission now secured, the £65 million development represents another significant addition to Hackney Wick’s evolving residential landscape and the continuing regeneration of Fish Island. Building, Design & Construction Magazine | The Choice of Industry Professionals
McCoy Lands Major Hinckley Park Groundworks Package as McLaren Pushes Ahead with Logistics Scheme
McCoy Contractors has secured a major earthworks and groundworks package from McLaren Construction for a new industrial and logistics development at Hinckley Park in Leicestershire. The 40-week programme will see the Midlands-based contractor undertake extensive cut-and-fill operations and soil modification before progressing to a comprehensive groundworks package incorporating drainage infrastructure, water tanks, foundations, a pump station and external concrete yard slabs. The contract continues a longstanding relationship between McCoy Contractors and McLaren Construction, with the two businesses having collaborated on a series of major industrial developments across the UK. Central to McCoy’s delivery strategy at Hinckley will be the installation of its own concrete batching plant on site. The approach has already been successfully deployed by the contractor at the circa one million sq ft TJ Morris Distribution Centre in Doncaster, where McCoy is delivering a £22 million groundworks package for McLaren. Producing concrete directly on site is designed to provide greater control over quality, programming and supply while reducing reliance on external ready-mix deliveries. Fewer concrete vehicle movements can also help reduce transport-related environmental impacts and alleviate logistical pressures surrounding major construction sites. The system provides additional flexibility when scheduling pours around changing weather and site conditions, while allowing the construction team to coordinate production more closely with the wider programme. McCoy’s appointment comes as investment continues across the wider Hinckley industrial and logistics market. McLaren Construction Midlands & North is also delivering a £48 million expansion at Mountpark Hinckley, comprising two high-specification warehouse and distribution buildings totalling approximately 772,000 sq ft. Hinckley Park itself has become an established logistics location close to Junction 1 of the M69, positioned between the East and West Midlands. Existing occupiers at the wider park include Amazon, DPD, Geosynthetics and Octopus Energy. Delivery of McCoy’s package will nevertheless involve several significant engineering and logistical challenges. Construction activity will need to be carefully coordinated around overhead power lines, an existing railway bridge and a high-pressure gas main, alongside areas of vegetation requiring management. The latest contract further expands McCoy’s portfolio of large-scale industrial and logistics infrastructure projects, while transferring construction methods proven on previous schemes to the Hinckley development. The use of on-site concrete production in particular demonstrates how contractors are increasingly looking beyond conventional supply arrangements to improve productivity, programme certainty and environmental performance on major warehouse and distribution projects. Building, Design & Construction Magazine | The Choice of Industry Professionals
Scotland Targets Private Investment to Unlock New Wave of BTR Development
Scotland is looking to attract greater levels of private investment into housing development, with Build to Rent identified as an important part of plans to accelerate the delivery of new homes across the country. The Scottish Government’s Programme for Government 2026–31 sets out plans for a new national housing agency, More Homes Scotland (MHS), which will bring together funding, expertise and delivery tools in an effort to remove barriers and get more housing projects moving. The agency is expected to be phased in from 1 April 2027. Central to the approach will be a strategic partnership between More Homes Scotland and the Scottish National Investment Bank (SNIB), designed to leverage additional private commercial capital for residential development. The partnership will look across different housing tenures, with Build to Rent specifically identified alongside affordable and social housing as an area capable of supporting increased delivery. The Government also wants the initiative to encourage new entrants into the market and support the growth of existing housing providers. For Scotland’s BTR sector, the announcement provides a potentially important new route for attracting institutional and private capital into projects at a time when the industry continues to face challenges around development viability, funding and the delivery of new housing at scale. More Homes Scotland will have a wider role in coordinating housing delivery and investment, strengthening regional collaboration and helping to align new development with economic growth priorities. The Government is also proposing further changes to the planning system aimed at speeding up development and helping projects progress from planning through to construction. The measures form part of a broader strategy to increase housing supply and improve investor confidence across Scotland. Alongside the increased focus on private capital, affordable housing remains a major part of Scotland’s housing programme. The Government has committed to delivering 111,000 affordable homes by 2032, with at least 70% intended for social rent. The establishment of MHS could therefore create a stronger link between public-sector housing priorities and institutional investment, opening opportunities for developers, investors, contractors and the wider construction supply chain. For Build to Rent in particular, the commitment is significant because it places the sector directly within the Government’s plans for increasing housing delivery rather than treating it solely as a specialist investment market. As More Homes Scotland begins to take shape ahead of its planned introduction from April 2027, attention will now turn to how its partnership with SNIB will translate private capital into viable development opportunities and, ultimately, new homes on the ground. Building, Design & Construction Magazine | The Choice of Industry Professionals
Willmott Dixon Tops Out £140m Derriford Emergency Care Centre in New Hospital Programme Milestone
Willmott Dixon has reached a major construction milestone at Derriford Hospital in Plymouth, topping out the £140 million emergency care building that is set to transform urgent and emergency healthcare provision across Plymouth, South Devon and Cornwall. The project represents the first Wave 1 scheme within the Government’s New Hospital Programme to reach this stage, marking significant progress for one of the NHS’s major healthcare infrastructure investments. Representatives from Willmott Dixon, its supply chain and the wider design team joined University Hospitals Plymouth NHS Trust (UHP) and hospital staff to celebrate completion of the building’s structural frame. Construction of the frame has required approximately 10,900 cubic metres of concrete and 1,900 tonnes of recycled steel reinforcement, with reducing embodied carbon forming an important part of the structural design from the outset. Around 55% of the cement content has been replaced with ground granulated blast-furnace slag (GGBS), a by-product of iron and steel production. This approach has resulted in an estimated carbon saving of 1,625 tonnes from the concrete used on the project to date. The sustainability strategy forms part of a wider drive to reduce the environmental impact of new NHS infrastructure. The Derriford development is one of the first New Hospital Programme schemes designed to meet the NHS Net Zero Building Standard, placing energy performance and carbon reduction at the heart of its design and construction. Once completed in April 2029, the new building will provide four clinical floors of modern, purpose-built accommodation for urgent and emergency care. An expanded Emergency Department will occupy the ground floor, increasing capacity and providing facilities designed specifically around modern emergency healthcare requirements. Following completion, the hospital’s existing emergency department will be reconfigured to create a dedicated Paediatric Emergency Department. The investment will provide an important upgrade to Derriford Hospital’s healthcare estate while supporting services for patients across a wide regional catchment. Delivery of the £140 million scheme is being undertaken through the ProCure23 framework, which is used by NHS organisations to procure healthcare construction and development projects. With the structural frame now complete, attention will increasingly move towards the building envelope, mechanical and electrical services, internal fit-out and the extensive specialist clinical infrastructure required before the new facility can become operational. The topping out represents an important step towards the April 2029 completion target and provides a significant early construction milestone for the wider New Hospital Programme. Building, Design & Construction Magazine | The Choice of Industry Professionals
Starlight Secures £680m War Chest to Deliver More Than 6,000 UK BTR Homes
Starlight Investments has completed the closing of its second UK Build to Rent fund, securing £680 million in total capital commitments to support the acquisition and delivery of more than 6,000 rental homes across the country. The capital has been raised through Starlight UK BTR Fund II alongside ancillary investment vehicles, providing significant backing for the global real estate investor’s continued expansion within the UK purpose-built rental market. The fund is already partially deployed, with three major residential communities currently under construction. Two are located in Manchester, while a further development is progressing in Basildon, Essex. Among Starlight’s growing pipeline is Trinity Heights in Manchester, a 60-storey BTR tower approaching completion, alongside The Mercantile in Basildon and another major rental community under construction within Manchester’s Greengate neighbourhood. The latest fundraising represents another substantial injection of institutional capital into the UK’s rapidly expanding BTR development sector. Investors participating in Fund II include institutions from Europe, Asia-Pacific and Canada, combining existing Starlight investment partners with several new entrants. Significantly, the fund has also attracted government-backed investment. Earlier this year, the National Housing Bank, part of Homes England, committed £100 million as a cornerstone investor in Fund II. The investment is intended to help accelerate Starlight’s pipeline of rental housing in locations where housing supply remains constrained. Starlight’s strategy is focused on professionally managed rental communities across major regional cities including Manchester, Liverpool and Leeds, together with locations within the London commuter belt. Developments are being targeted towards areas with strong rental demand and access to employment, education and transport infrastructure. The company’s wider UK platform now comprises 12 BTR communities at various stages from development and construction through to leasing and operation. Starlight says its expanding pipeline is expected to place the business among the UK’s four largest BTR operators by scale as further developments become operational. Jonnie Milich, Head of UK Residential at Starlight Investments, said the closing would allow the business to concentrate on execution and the next phase of growth, supported by an established development pipeline and expanding UK team. The investment comes as institutional capital continues to play an increasingly important role in bringing forward large-scale rental housing. For the construction and residential development markets, Starlight’s £680 million capital raise provides substantial funding capacity for thousands of new homes, creating a significant future pipeline for architects, contractors, consultants and specialist supply chain businesses as schemes progress. Starlight has operated in the UK since 2020 and, as of May 2026, managed around 4,000 UK homes with approximately £1.1 billion of assets under management. Building, Design & Construction Magazine | The Choice of Industry Professionals