Coronavirus: Councils offered £500m to help with costs

Coronavirus: Councils offered £500m to help with costs

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The government has announced a further £500m to help councils in England facing extra cost pressures as a result of the coronavirus pandemic.

The money – which can be spent as authorities see fit – comes on top of £3.2bn already received.

Councils have warned of a funding black hole of up to £7.4bn due to increased costs, including social care, coupled with lost income from fees and charges.

Labour urged ministers not to make further cuts to local services.

Under the government's plan, some councils will be reimbursed for 75% of lost income. This will apply where more than 5% of planned takings from sales, fees and charges have not been collected.

The government will also allow council tax and business rate deficits to be paid over three years instead of the usual one.

Local Government Secretary Robert Jenrick said his plan would bring "certainty and stability".

Addressing the Local Government Association's (LGA) annual conference, he promised to "continue to stand shoulder-to-shoulder" with communities.

Mr Jenrick called his plan "sophisticated", although it was "difficult to forecast the true financial consequences of Covid-19 on all councils".

There's been growing pressure on the government to come up with further financial help for councils, with several suggesting they face effective bankruptcy and many warning of cuts to crucial services this year without more cash.

While the extra £500m will be welcome, in itself it falls far short of the funding gap predicted.

For those local authorities which rely on money from fees and charges for things like leisure and car parking, the fact they'll be reimbursed for lost income will be a real help.

But for many councils this package won't end the financial uncertainty, particularly for those with responsibility for social care – a sector long under strain, that's long been promised reform.

For Labour, shadow local government secretary Steve Reed said many councils were "on the brink of bankruptcy, adding that unless the government kept "its promise to fund the costs in full, councils will be forced to cut back services like social care, youth activities and bin collections, and closed libraries and leisure centres might never reopen".

He asked for details now on how the money was being shared, rather than in the autumn, "which might be too late to save many frontline workers' jobs that are now at risk".

The LGA, which represents councils in England, said more money was "desperately needed to fully address the severe financial challenges facing councils and our local services".

Chairman James Jamieson said: "The government's commitment to fund a portion of councils lost income from fees and charges is a step in the right direction.

"However, this does not cover the full losses, nor does it extend to commercial and other income losses and is likely to still leave councils having to absorb a substantial and unforeseen loss of funding, in particular the loss of local taxes."

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