William Eichler 16 June 2020

Council chiefs call for action to resolve £6bn Covid-19 crisis

Local authority leaders have urged the Government to provide detailed plans on how to ensure the financial stability of cash-strapped councils.

Already strained local authority budgets have been placed under more pressure by the pandemic with the Local Government Association (LGA) estimating the funding shortfall for councils this year to be ‘at least’ £6bn.

Speaking in the Commons yesterday, the local government minister Simon Clarke said that the Government was working on a ‘comprehensive plan to ensure financial sustainability of councils this financial year’.

Cllr James Jamieson, chairman of the LGA, welcomed the announcement, but stressed that the Government needs to release the details of the rescue package.

‘We are pleased that the Government has indicated it is working on a comprehensive plan to address the ongoing financial challenges councils face this financial year as they lead communities through the COVID-19 crisis. We urge the Government to bring forward details of this plan as soon as possible,’ he said.

‘Councils have a legal duty to balance their budgets each year and are heavily reliant on income from local taxation, commercial activity and fees and charges.

‘Confirmation of future funding – including compensation for all lost income as a result of the pandemic alongside extra cost and demand pressures – is vital if councils are to avoid taking measures, such as in-year cuts to local services, to cope with funding shortfalls.’

Cllr Jamieson acknowledged that the Government had provided emergency funding in recent months. However, he stressed that ‘further funding and financial flexibilities’ were required or else local authorities would have to resort to cutting services.

Responding yesterday to a question about whether councils should resort to austerity measures, Mr Clark said: 'The answer to that question is unequivocally no, they should not. As I set out in my previous answer, we are working closely with the Treasury on a comprehensive settlement for the sector, which we will bring forward in due course.'

‘The Government has shown a commitment to fully understand the financial pressures facing local services and councils are providing robust evidence each month on the scale of the challenge they face,’ Cllr Jamieson said.

‘Not only do councils need to be fully funded to continue supporting communities through this immediate crisis but also to support the nation as we tackle the unprecedented social and economic task ahead and move into the next phase.’

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