Coronavirus: Councils offered £500m to help with costs

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The government has announced a further £500m to help councils in England facing extra cost pressures as a result of the coronavirus pandemic.

The money – which can be spent as authorities see fit – comes on top of £3.2bn already received.

Councils have warned of a funding black hole of up to £7.4bn due to increased costs, including social care, coupled with lost income from fees and charges.

Some councils will also be reimbursed for 75% of lost income.

This will apply where more than 5% of planned takings from sales, fees and charges have not been collected.

The government will also allow council tax and business rate deficits to be paid over three years instead of the usual one.

Local Government Secretary Robert Jenrick said: “Councils are playing a huge part in supporting their communities during this pandemic.

“From supporting the most vulnerable and keeping vital services running to operating local track and trace, council workers have been at the forefront of this great national effort and are the unsung heroes of this pandemic.”

He added: “I know that the loss of revenue from car parks and leisure centres has created huge difficulties, so I am introducing a new scheme to help cover these losses.”

There’s been growing pressure on the government to come up with further financial help for councils, with several suggesting they face effective bankruptcy and many warning of cuts to crucial services this year without more cash.

While the extra £500m will be welcome, in itself it falls far short of the funding gap predicted.

For those local authorities which rely on money from fees and charges for things like leisure and car parking, the fact they’ll be reimbursed for lost income will be a real help.

But for many councils this package won’t end the financial uncertainty, particularly for those with responsibility for social care – a sector long under strain, that’s long been promised reform.

The County Councils Network – which represents England’s 36 county councils – welcomed the funding, calling it “vital support to meet the unprecedented levels of additional costs and lost income as a result of Covid-19”.

But chairman David Williams said: “With costs continuing to rise and no guarantees over compensation for lost council tax and business rates, many of our member councils still face financial uncertainty this year and next.”

The Local Government Information Unit think tank said: “There will be a debate about whether this additional funding support is enough. From our perspective, it doesn’t look like it.”

The Local Government Association (LGA), which represents councils, says its members face a funding gap of £7.4bn because of coronavirus.

Labour leader Sir Keir Starmer said on Wednesday that “government inaction” had created a “perfect storm” which could see services suffer.

Mr Jenrick is due to address the LGA’s annual conference at 14:00 BST on Thursday, via Zoom.

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