A government coronavirus bail-out for councils is “no more than a sticking plaster”, and represents only a small fraction of the £10billion black hole confronting local authorities, as today’s announcement of an extra £500million leaves many Town Halls short-changed.
The cash equates to less than £2million each for Croydon and the other 342 local authorities in England – with extra money for those in Scotland and Wales.
Croydon and other local authorities have had to break the bank and bust their budgets to keep services running through the coronavirus emergency.
Croydon Council is now undergoing an urgent financial review, conducted by outside auditors and finance directors, and – as exclusively revealed by Inside Croydon – is facing making 15per cent cuts to its operations in order to make good the £62million gap between what it has spent during the first two months of the covid-19 lockdown and what it has received so far from government.
At the start of the lockdown, Boris Johnson’s Tory-run government told councils to spend “whatever it takes” to help their vulnerable and old, local small businesses and other residents through the uncertain weeks ahead.
But now, council leaders – from all political parties – are saying that they have been stiffed by the government.
The government has so far provided £3.8billion to councils towards their on-going costs of dealing with the pandemic. For Croydon, that represented about £20million towards its mounting bills of £83million.
The announcement today came from under-fire Tory housing and local councils minister Robert Jenrick, who is at the centre of a controversy after granting planning permission to a scheme on the Isle of Dogs for a Tory and UKIP party donor, ex-pornographer Richard Desmond.
Desmond stands to make twice as much from the £1billion development of Westferry print works as the government is now divvying up among England’s local councils.
Last week, Tory-run local authorities warned that they face possible bankruptcy if a second wave of coronavirus forces Britain into a new lockdown.
And today, Nick Forbes, the Labour leader of Newcastle City Council, addressed Jenrick and Johnson on Twitter, writing: “I’m sorry, this £500million goes nowhere near filling the £10billion funding gap councils face this financial year.”
The government’s official announcement described the new funding as “a major new support package… part of a comprehensive plan to ensure councils’ financial sustainability for the future”.
The announcement from Jenrick’ssaid, “Recognising that councils are best placed to decide how to meet pressures in their local area, this funding has not been ringfenced. In addition to this funding, a major new scheme introduced by the government today will help to reimburse lost income during the pandemic and boost cash flow.
“Where losses are more than 5 per cent of a council’s planned income from sales, fees and charges, the government will cover them for 75p in every pound lost.
“Additionally, to enable them to get on the front foot and build much-needed breathing space into their budgets, the government is also bringing in changes so that they can spread their tax deficits over three years rather than the usual one.
“This will allow authorities to pay deficits off in a reasonable timescale and will limit their cashflow pressures.
“Recognising the unprecedented impact the pandemic has had on councils’ income from car parks, museums and other cultural assets, the government is introducing a scheme to compensate them for these losses.
“This means that all relevant losses, over and above the first 5 per cent of planned income from sales, fees and charges, will be compensated for at a rate of 75p in every pound.
“This balances the need to provide compensation given the scale of the income losses, encouraging councils to manage and minimise loss where they can and giving them the certainty they need.
“In the next Spending Review, we will determine what support councils need to help them meet the pressures of income loss from council tax and business rates.”
The Spending Review won’t be until the autumn, leaving council chief execs such as Croydon’s Jo Negrini and finance cabinet members like Simon Hall, waiting for at least another three months to discover whether the government will honour its original promise over covid funding.
But as one senior council figure said after hearing of the £500million fund, “It’s a drop in the ocean compared to what is needed.
“This is less than £2million per council. Some councils are worrying about shortfalls of 20 times that amount. In Croydon’s case, it’s 30 times as much.
“It’s a sticking plaster, no more.”
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