PARLIAMENTARY WRITTEN QUESTION
Local Government Finance: Coronavirus (22 July 2020)

To ask the Secretary of State for Housing, Communities and Local Government, what assessment he has made of the additional funding requirements of local authorities that have a budget shortfall as a result of the covid-19 outbreak.

Asked by:
Nadia Whittome (Labour)

Councils across the country are supporting communities, protecting the most vulnerable and helping the NHS in our efforts to combat Covid-19. In order to meet additional cost pressures, we are providing local authorities with an unprecedented package of support, allocating £4.3 billion of support for?spending?pressures, including £3.7 billion of un-ringfenced grants and the £600 million Infection Control Fund. This direct?financial support?the Government has?provided is just part of the comprehensive package of support?which includes cashflow measures, support for the homeless, and bus and tram services, not to mention grants and business rates reliefs for businesses. In total, the Government has committed almost £28 billion to local areas to support councils, businesses and communities.

The Secretary of State has also announced measures to address lost income, including:

• a co-payment scheme to cover irrecoverable Sales, Fees and Charges income in 20/21 with the Government covering 75 per cent of losses beyond 5 per cent of planned income;
• phased repayment of Collection Fund deficits over the next 3 years;
• a commitment to determine what support is needed to help councils meet the pressures of irrecoverable tax income at the Spending Review.

Our new approach to financial support for councils in the fight against Covid-19 is more robust and longer-term, replacing both previous rounds of allocations. It shares the burden fairly between central and local government. We have reset the whole approach by estimating both expenditure pressures and income reductions through to the end of the financial year, based on what local authorities have told us in the latest financial monitoring and operational response. Over 99 per cent of local authorities responded to our May Covid-19 financial monitoring survey. We are extremely grateful for their continued collaboration, which enables us to understand pressures at a national and local level.

We will continue to monitor the impact of Covid-19 on local government and would ask that any local authority who is faced with an unmanageable pressure or is concerned about their future financial position should approach MHCLG to discuss.

Answered by:
Sir Simon Clarke (Conservative)
1 September 2020