Local councils face financial failure if government forces them to pay share of extra coronavirus costs, councillors warn

Town halls call for 'cast-iron' guarantee of funding support from communities secretary Robert Jenrick

Britain's Housing Secretary Robert Jenrick holds a coronavirus disease (COVID-19) digital news conference in March 2019 (Reuters)

Local councils have warned that town halls across England face financial failure if central government requires them to pay a share of the massive extra costs imposed by coronavirus.

The warning came after a conference call with Robert Jenrick earlier this week, in which some of those taking part said that the communities secretary raised the issue of “burden sharing”.

Mr Jenrick has previously announced £1.6 billion in extra funding for councils to help cover the additional costs of services for the elderly, disabled and homeless during the outbreak, which has also seen town hall revenues from sources like planning fees and leisure centres tumble. And reports suggest a further £1 billion could be unveiled over the weekend.

But the Local Government Association said ministers must go further and offer a “cast-iron public commitment” that central government will pay all of the extra bill.

And the Local Government Information Unit think tank warned that councils will “fail in large numbers” unless Mr Jenrick lives up to an earlier promise to “do whatever is necessary” to support them.

The LGA, which represents councils in England, said that without firm guarantees of funding it was likely that a number of local authorities will be subject to Section 114 notices, banning further expenditure, within weeks.

The chair of the association’s resources board, Richard Watts 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.”

LGIU chief executive Jonathan Carr-West described reports that councils were to be expected to share the burden of coronavirus costs as “worrying”.

“Councils are already caught in a perfect storm,” he said.

“They have to manage both the costs of coping with Covid-19 and supporting vulnerable people in the community and the increased cost and difficulty of providing ‘normal’ services in the midst of this – services including social care which protects capacity in the NHS.

“They will have ongoing costs supporting a transition to ‘normal’ life. At the same time, they face a loss of income from charges and council tax.

“And, on top of all of this, there are underlying financial pressures which have already taken councils to the brink of financial failure; including the rising costs of care and children’s services. All of these get worse by the month and we are further than ever from a plan for sustainable local government finance with councils now propped up by short term annual financial settlements.”

He warned: “If the Government does renege on its promise to support councils, they will fail in large numbers. That will plunge millions of people around the country into further crisis and impede our national recovery from Covid-19.

“Ministers have become accustomed to thinking of local government as a bottomless pit into which they can shovel financial and political risk. That’s just not tenable any more."

A spokesperson for Mr Jenrick's Ministry for Housing, Communities and Local Government (MHCLG) said: “The secretary of state has been clear that we will support councils to provide services to their communities during the pandemic.

“We’ve already provided £1.6 billion of additional funding and have announced new measures to help ease immediate cash flow pressures faced by councils in England.”