Councils’ budget pressures in the media: CCN response

This weekend the media have reported the additional costs facing councils as a result of Coronavirus, based on the data submitted by local authorities to the Ministry of Housing, Communities, and Local Government.

Based on the County Councils Network’s analysis of its member councils’ projections, county authorities will face cost pressures of £1.3bn and lost income of £754m because of the outbreak.

You can read a write-up of CCN and the Special Interest Group of Municipal Authorities calls for the government’s £1.6bn for councils to be focused on additional costs of the outbreak, rather than lost income, here.

Below, the network responds.

A County Councils Network spokesperson said:

“The Special Interest Group of Metropolitan Authorities’ (SIGOMA) analysis demonstrates the severe cost pressures that the sector’s response to COVID-19 is placing on upper-tier services, particularly social care. Analysis of CCN members’ own returns show that the 36 county authorities initially estimate their additional service cost pressures at £1.3bn. Based on their estimated spending need in 2020/21, this means their costs will rise 6.3% this year. This compares to £720m, or 5.9% for metropolitan boroughs.

“The government has been clear that the £1.6bn for councils, announced last week, has been provided to respond to the additional service costs faced by local authorities with a separate solution needed to compensate loss of income. CCN member councils’ returns, and those of the SIGOMA, show that if the government changes the distribution of emergency funding it will disproportionately and unfairly impact CCN member councils and those responsible for adult social care, reducing the funding available for these vital care services.

“The CCN recognises that district authorities face financial challenges, particularly in relation to loss of income. This will require intervention by the government with additional resources, but this should be a  targeted and tailored response outside of the £1.6bn allocation which is to address additional costs from the virus. Loss of income from council tax, business rates, fees and charges will place a significant additional cost burden on all authorities. Our members initially estimate their lost income at £754m, but 13 county councils were unable to provide the government with data on their potential lost income as they are not the billing authorities. This therefore severely underestimates CCN members’ potential lost income, and we need to work as a sector with Government to understand the true scale of our loses, which could run to several billion.

“Alongside written confirmation that the government will meet all additional costs and underwrite any loss of income, there are a number of other measures that ministers could bring forward to provide short-term financial flexibility, such as a relaxation of borrowing rules so councils can borrow to fund revenue spending and a suspension of section 114 requirements. This would complement cashflow measures already announced by the government to help local authorities during this crisis.”