Coronavirus-led demand pressures and a loss of income risk
combining to push councils towards financial failure, the Local
Government Association warns today.
Councils across the country are leading local efforts to support
communities through the coronavirus crisis and keep day-to-day
services running. This has led to significant unforeseen demands
and costs caused by the pandemic – to protect the vulnerable such
as older, disabled and homeless people - and in order to continue
to keep normal services running, such as bin collections.
This is at the same time as councils have seen a large and
immediate hit to their income. Many councils use income from fees
and charges to fund a range of services, such as leisure and
planning services, many of these services are scaled back or
closed so income has dried up yet most costs including payment of
staff continue to be incurred.
The LGA, which represents councils in England, is calling on the
Government to provide a cast-iron public commitment that it will
provide additional funding to fully meet extra costs to councils
and compensate for lost income.
Before the coronavirus crisis hit, councils had to identify
another round of savings needed to balance their books from
April. As they rightly focus on providing vital services, the LGA
said it is increasingly unlikely that councils will be able meet
these savings this year. Without this urgent government funding
guarantee, some councils may be subject to Section 114
reports in the next few weeks.
This would lead to spending blocks by councils and in-year cuts
to the vital local services that are supporting communities
through this crisis and the national effort to beat this deadly
disease.
The £1.6 billion recently provided by the Government has helped
ease some of the pressure on local services during the
coronavirus crisis. The Government’s decision to also allow
councils to postpone business rates payments to central
government and its move to pay care grants up front will help
councils with some of their immediate cash-flow pressures.
The LGA said it is increasingly clear that further funding is
needed to meet all pressures, income losses and expectations
placed on councils by various government departments in
connection to COVID-19.
Cllr , Chair of the LGA’s
Resources Board, said:
“Local government continues to step up to the unprecedented
challenge we face as a nation. It will do everything it can to
help residents and businesses but is being stretched to the
maximum.
“Many councils are facing increased cost and demand pressures at
the same time as seeing a significant drop in income. This is
unsustainable and pushing councils towards financial failure.
“It is good that the Government has moved to provide some
financial help to councils. Additional funding is urgently needed
to help councils get through this crisis, support the vulnerable
and adapt to life once we defeat this virus when our local
services will be needed more than ever to help communities
rebuild.
“It would be wrong and unacceptable if councils are then forced
to make further cutbacks to the very services that will have
helped the nation through this crisis and the key workers who are
producing heroics on the frontline see their jobs placed at
risk.”
