Local Authorities: Lost Revenue

Housing, Communities and Local Government – in the House of Commons on 15th June 2020.

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Photo of Jeff Smith Jeff Smith Opposition Whip (Commons)

What recent estimate he has made of the value of revenue lost by local authorities as a result of the covid-19 outbreak.

Photo of Gerald Jones Gerald Jones Shadow Minister (Wales)

What recent estimate he has made of the value of revenue lost by local authorities as a result of the covid-19 outbreak.

Photo of Simon Clarke Simon Clarke Minister of State (Housing, Communities and Local Government)

We are working closely with the sector to develop a good understanding of the pressures that local authorities currently face. We have announced £3.2 billion of additional funding, councils will be able to defer £2.6 billion in business rates payment, and £850 million in social care grants were paid in April in a move aimed at helping to ease immediate pressures on local authority cash flows.

Photo of Jeff Smith Jeff Smith Opposition Whip (Commons)

Manchester has lost £136 million in revenue this year alone. In Greater Manchester, the funding gap is £406 million. In the UK, it is £10 billion. The Minister just told us unequivocally that local authorities should not make plans for more austerity. Is he committing to fully fund those gaps?

Photo of Simon Clarke Simon Clarke Minister of State (Housing, Communities and Local Government)

As I explained in my previous answer, we will issue a comprehensive spending plan, which ensures that we do not leave local authorities facing unmanageable spending pressures in the year ahead. I point out that Greater Manchester councils have received £168 million of additional funding in response to the pandemic and their core spending power in this financial year increased by £150 million. I know that my right hon. Friend the Secretary of State has held detailed talks with Sir Richard Leese, and obviously an invitation to have further conversations as required always stands.

Photo of Gerald Jones Gerald Jones Shadow Minister (Wales)

The financial position of Merthyr Tydfil and Caerphilly County Borough Councils, which cover my constituency, was difficult enough before the pandemic owing to years of UK Government austerity. Will the Minister commit to ensuring that the Welsh Government receive the funding they need for Welsh local authorities and the funding that the Prime Minister committed to Wales in February to tackle the effects of Storm Dennis? The impact of the floods and the pandemic have caused a hugely difficult situation for local authorities in my area and across Wales.

Photo of Simon Clarke Simon Clarke Minister of State (Housing, Communities and Local Government)

The winter storms have passed from memory, given everything that has happened subsequently, but they were terrible and had a significant impact on several communities, particularly on the west coast of the country. I am very conscious of that. We of course make a commitment that the funds that were promised will be paid. Local government is a devolved matter and therefore my Department does not engage directly with Welsh councils, but they can rest assured that they will receive their fair share according to the Barnett formula.

Photo of Kate Hollern Kate Hollern Shadow Minister (Housing, Communities and Local Government)

Thank you, Mr Speaker, but it is not so sunny today I am afraid.

The Government made a promise to councils that they would provide full support so that councils could do whatever it takes to get through the coronavirus crisis. According to Local Government Association figures released on 29 May, councils needed as much as £6 billion to cover the cost of coping with the ongoing pandemic. If things returned to normal, that was the Government’s promise. However, we all know it is obvious that things will not to return to normal in July. Will the Minister speak to his Treasury colleagues and keep his promise to cover the deficit faced by councils and prevent them from going over the cliff edge? I acknowledge the Minister’s earlier responses, but he has yet to give a complete commitment to funding councils’ deficit.

Photo of Simon Clarke Simon Clarke Minister of State (Housing, Communities and Local Government)

We are obviously very conscious of £9.3 million that we have given to Blackburn with Darwen Borough Council. It is crucial that we deliver a suitable funding settlement for local authorities. We are working hard with Treasury colleagues to do that. The hon. Lady can rest assured that we will bring further details to the House as soon as we are ready.