Councils warn of £10billion cash black hole as Robert Jenrick pumps an extra £500million into struggling English local authorities – less than £1.5million each – amid bankruptcy fears
- Local Government Secretary said cash would go towards covering lost income
- It is part of £4.3billion package of support put in place by the Government so far
- Councils have warned they face a funding black hole of up to £10billion
- An already dire financial situation had made worse by coronavirus pandemic
Robert Jenrick sparked a row with local government this morning after announcing plans to pump an additional £500million into council coffers today.
The Communities Secretary said the cash would go towards covering lost income during the coronavirus lockdown, which has seen mothballed firms given business rate holidays and forced other cuts to income.
It is part of a £4.3billion package of support put in place by the Government and is not ring-fenced and allow council and business rates tax deficits to be repaid over three years instead of one.
The Government said it understood the ‘unprecedented impact’ the pandemic has had on councils’ income from car parks, museums and other cultural assets, and will compensate them.
Mr Jenrick said that to ‘boost cash flow’ any loss of income above 5 per cent of the planned take from sales, fees and charges will be compensated at a rate of 75p in every pound.
But it comes as as councils warn they face a black hole of up to £10billion because of lost income and increased expenditure to deal with coronavirus.
The cash equates to less than £1.5million for each of the 343 local authorities in England – with extra money for those in Scotland and Wales.
It comes after Tory-run local authorities last week warned the Government they face possible bankruptcy if a second wave of coronavirus forces the UK into a new lockdown.
Nick Forbes, the Labour leader of Newcastle City Council, addressed Mr Jenrick and Boris Johnson on Twitter, writing: ‘I’m sorry, this £500million goes nowhere near filling the £10billion funding gap councils face this financial year.
The Communities Secretary said the cash would go towards covering lost income during the coronavirus lockdown, which has seen mothballed firms given business rate holidays
Nick Forbes, the Labour leader of Newcastle City Council, addressed Mr Jenrick and Boris Johnson on Twitter
‘We’ve been giving you the benefit of the doubt up until now, but our patience is wearing very thin.’
Shadow communities secretary Steve Reed said ‘Many councils are on the brink of bankruptcy because of the costs of tackling Covid-19, so any help is welcome.
‘But if the Government breaks 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.
‘This funding is a start, but we don’t know how it will be shared out and much of the detail is being held back until the autumn which might be too late to save many frontline workers’ jobs that are now at risk.
‘We urge the Government to stick to its promise to support councils to do what’s necessary to get communities through this. Councils have kept their part of the bargain, now the Government must do the same rather than punish local communities with cuts to the services they rely on.’
Mr Jenrick MP said: ‘Councils are playing a huge part in supporting their communities during this pandemic.
‘From supporting the most vulnerable and keeping vital services running to operating local track and trace, council workers have been at the forefront of this great national effort and are the unsung heroes of this pandemic.
‘Today I am providing a further package of support that takes our support for councils during this pandemic to £4.3 billion to help meet the immediate pressures councils are facing.
‘I know that the loss of revenue from car parks and leisure centres has created huge difficulties, so I am introducing a new scheme to help cover these losses.’