Councils’ allocations of the £1.6bn for local government: CCN response

Last night, the government published councils’ allocations from the £1.6bn made available to local government.

Compared to the £1.6bn for councils made available in March, county authorities’ share of the total has decreased by almost 30%, whilst the share for district councils has increased markedly.

Below, the County Councils Network has issued a statement in response.

Cllr David Williams, chairman of the County Councils Network, said:

“The County Councils Network (CCN) worked hard with the sector and the government to deliver the £1.6bn funding announced earlier this month. Any additional resources in the current crisis is welcome as counties battle the impact of COVID-19 in our communities and continue to deliver essential services our residents rely on.

“Nonetheless, we are disappointed that our member councils have seen a disproportionate change in their share of allocations compared to the previous £1.6bn. Their share of funding has reduced on average by 29% for county councils and also significantly for many of our unitary members, despite our councils being responsible for the single most important local government service responding to Coronavirus: adult social care.

“We recognise that all councils face financial challenges as a result of COVID-19, both in terms of cost pressures and lost income. Councils of all shapes and sizes face the risk of issuing section 114 notices in the face of this crisis, and that is why CCN made the case for county, unitary, metropolitan and district councils to have their lost income met by a separate and comprehensive multi-billion-pound package of support.

“However, with district councils receiving 35% of the new resources in shire counties, despite representing 10% of service expenditure in two-tier areas, it is clear that government is providing only one tier of local government with support for the immense pressure that lost income is placing on all our budgets.

“Therefore, while this announcement provides some funding to meet cost pressures, it leaves our councils facing an immediate funding shortfall of at least £600m from service pressures and lost income from fees, charges and other streams – a figure that will rise over the duration of the outbreak. Separately, CCN member councils face the prospect of millions in reduced business rate income and potentially the biggest financial liability from non-payment of council tax. Taken together, we initially estimate these could total a further £2.4bn.

“Counties already faced an existing funding shortfall of £1.8bn before this crisis. Our councils have already committed £322m in additional increased fees to care providers struggling with additional costs from the crisis, which will grow further over coming weeks. We face hundreds of millions in additional costs to buy personal protection equipment and support efforts in helping the NHS free up beds to treat COVID-19 patients. This is alongside additional costs in all our core essential services.

“Unless a solution is forthcoming to address these growing additional pressures as the crisis goes on, and crucially, our lost income, it is inevitable that the resources in shire counties made available to life-critical social care services will be reduced, resulting in extremely difficult choices facing our member councils.

“Most importantly, unless further support is provided to all councils, some may feel that they have no choice but to suspend all non-essential expenditure, hampering our national efforts to defeat the Coronavirus and prepare for the economic recovery.”

Notes to editor

• The £600m figure in paragraph five is taken from councils’ Delta returns to the Ministry of Housing, Communities, and Local Government and refers to current estimates of the remaining shortfall in funding pressures and lost income from fees, charges, and other lost income (such as commercial income), excluding county tax and business rates income, after accounting for allocations from the £3.2bn. This figure is for 34 of the 36 CCN member councils.
• The £2.4bn figure in paragraph five of this statement is derived from initial estimations for CCN from modelling on the potential reduction in lost income from retained business rates from business closures in county areas, and the lost income from individuals unable to pay council tax as a result of the virus.