CROYDON IN CRISIS: According to London-wide figures published today, unemployment in the city is approaching half a million people while covid-19 has cost every borough in the capital £66m.
In Croydon, the latest estimate of the budget overspend has now reached a breathtaking £96.5m. As STEVEN DOWNES reports, tomorrow’s Budget is crucial for the future of all the city’s local authorities
As he prepares to issue his Covid Budget speech tomorrow, Chancellor Rishi Sunak holds the future of not only Croydon Council in his hands, but every other borough in the capital.
That’s according to London Councils, the capital-wide organisation of the 32 boroughs and the City of London, which has today, on the eve of the Chancellor’s Budget speech, called on Sunak to boost the city’s recovery from the covid-19 pandemic by giving local government the funding and powers to ignite the economy and boost jobs in an inclusive way.
London Councils estimates that total financial impact of the virus on London boroughs this year will be £2.2billion, half of which is additional spending and half of which is lost income.
In Croydon, according to figures presented to last night’s cabinet meeting, the council now has an overspend on its budget of £96.5million – up from £64million as recently as December. The council’s leadership is waiting anxiously on a decision from HM Treasury and the Ministry of Housing, Communities and Local Government over whether it will be allowed to borrow £150million to balance the books.
And while Croydon remains the only local authority to have issued a Section 114 notice because it is unable to balance its books, there are well-merited concerns that other boroughs are also close to the financial precipice.
“A cliff-edge ending to support would be catastrophic for businesses, workers and families across the city,” Georgia Gould, the chair of London Councils, warned today.
London has experienced the largest number of job losses of any part of the UK – there has been a 157 per cent increase in unemployment claims between March 2020 and January 2021, reaching a total of 485,000 in London.
“Unemployment on this scale risks pushing significant numbers of families and households in London into poverty,” a statement by London Councils said.
Particularly hard-hit has been London’s hospitality sector, where more than 70 per cent of the workforce have used the coronavirus job retention scheme. Three-quarters of London’s arts, entertainment and recreational businesses are reporting a decrease in turnover.
London Councils’ is asking the Chancellor’s Budget to deliver for London:
- Extending targeted business rates reliefs for the retail, hospitality and leisure sectors into 2021-22;
- An extension of the coronavirus job retention scheme and support for the self-employed;
- Releasing further discretionary grant funding for businesses to enable councils to target support locally;
- Increasing the Test and Trace self-isolation support payment to enable more people in low paid and insecure employment to stay at home if they test positive for the virus; and
- Supporting longer-term job creation and productivity by devolving skills and employment and the Apprenticeship Levy.
London Boroughs said today, “From supporting local high streets to follow pandemic restrictions to finding safe accommodation for rough sleepers and running local testing centres, London boroughs have been at the forefront of the response to covid-19, but they have also been deeply affected by it.
“Councils will also be at the forefront of supporting families and communities hit hardest by job and income losses over the coming year.”
London Councils predicts that the government’s covid emergency funding could be £400million short of what the boroughs have spent.
“With much of this impact not hitting budgets until the next financial year, and additional spending and income losses likely to continue, the financial impact of the virus will be felt well into 2021-2022 and beyond,” they said.
London Councils are seeking help in the Budget for the boroughs as follows:
- Providing further emergency funding before April if needed;
- Expanding the 75 per cent Sales, Fees and Charges and tax loss schemes so that they cover all losses;
- Extending both schemes to cover the whole of 2021-2022;
- Providing compensation for lost Housing Revenue Account, commercial and other income (worth nearly £180million in London); and
- Confirm the timetables for the Spending Review, the Fair Funding Review and reforms to Business Rates retention – which should pave the way for meaningful long-term fiscal reform.
“The Budget must recognise that businesses, workers and local councils will be under enormous pressure for many months as pandemic restrictions are eased and as we seek to recover,” said Gould, the leader of Camden Council.
“London typically provides a net surplus of £39billion to the Treasury. Targeted investment to support businesses and workers in the capital and across the country, supported by local leaders, is the surest route to a sustainable and inclusive economic recovery, and the best way to avoid real harm to Londoners just looking to get back on their feet after the challenges of the last year.
“London boroughs are at the heart of their communities and have played a pivotal role in responding to covid-19 – protecting the most vulnerable, delivering new services and working closely with government to communicate advice and information to our residents.
“We need financial certainty and stability to continue delivering effective services, to keep people safe and to help businesses through the unpredictable months ahead.”
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