How local government has responded to Covid-19 – and what it means financially

Each day this week I’ve written about a different element of the local government response to Covid-19. Whilst I’ve been able to cover some areas in detail, there are dozens more that I could have focused on reflecting the diverse nature of the work undertaken by the local government family. Not one area of our service has been untouched by the crisis. And whilst the various aspects of our work are very different, they all have one thing in common: they cost money to deliver, and are needed more than ever in responding to Covid-19.

Much has been written about the financial impact of Covid-19 on local authority budgets. There is a funding gap running into the billions facing all councils. Despite broken promises from the Communities and Local Government Secretary that we would receive “everything we need” to counter the impact of the outbreak, so far councils have received about 30% of the money we require to make us whole. For Trafford, the in-year funding gap we are currently looking at due to Covid-19 is £37m, more than 20% of our annual revenue budget. To date, the government has provided around £12m and in recent weeks has shifted its tone to suggest that our costs will not be met in full. This is a scandal: for Trafford, that means a £25m black hole, whilst across Greater Manchester the total in-year impact of Covid-19 is estimated at over half a billion pounds.

As with so many of our peers, Trafford simply cannot fill a funding gap such as this. Austerity has ravaged our budget for more than a decade and it is no exaggeration to say that there is nothing left to cut. We want to respond effectively to Covid-19 but our capacity to do so is becoming increasingly limited. In the current climate our residents need us to do more, not less. Yet without further funding we will have to look at in-year funding cuts. Cuts on this scale can’t be plugged easily. It would mean tens of thousands of local government workers across the country – who have been on the frontline of this crisis – losing their jobs and entire service areas disappearing.

Even then, our statutory services would likely be unsustainable. The government just doesn’t seem to understand this. It’s as though they simply cannot comprehend the scale of the cuts that we have faced already, or the innovative ways in which councils have adapted to the challenge rather than simply hacking away at frontline services. One particularly interesting intervention from the Secretary of State seemed to question the figures submitted by councils for income generation – the principle way that services have been sustained in the absence of proper national funding in the form of the Revenue Support Grant. Councils are bringing in millions of pounds in income from a range of sources to close the gap left by austerity, yet the Tories appear clueless as to the reality on the ground.

It’s not rocket science to see why Covid-19 would have had such an impact. Councils have increased costs across social care, enforcement, advice and support and in a number of other areas. We’ve also been asked to lead on the distribution of business grants and the coordination of community crisis support – work we weren’t having to do three months ago. At the same time many council investments are struggling as the economy contracts, some authorities have lost parking income and other revenue streams entirely, whilst leisure centres, libraries and other community facilities are closed. The precarious funding position we find ourselves in has been ten years in the making and Covid-19 has brought it to a head.

We need that in-year funding gap plugged as we were promised it would be, and we need it now. If not councils will have to consider stepping back from Covid-19 related activities and other essential work just to avoid running out of money altogether as well as making a raft of in-year service cuts. It’s not hyperbole to suggest that some councils are already considering issuing statutory section 114 notices: the formal warning to councillors that the council is entering the last chance saloon in terms of expenditure.

All of this makes for an incredibly worrying time for local authorities and the people that we serve. What concerns me further, however – and hasn’t yet really attracted much coverage as we focus on in-year crisis response – is the impact all of this will have on our longer-term futures. The absolute minimum the government must do is reimburse us for the full immediate financial impact of Covid-19, as promised. But in addition to that further £25m needed in Trafford, we must open a dialogue about the 2021/22 financial year. This was always going to be a difficult year for Trafford’s budget. Various tweaks to government policy, ongoing austerity, and the unfunded demand pressures of an ageing population had combined to mean we should be working now to close next year’s £19m funding challenge.

We had recognised this was coming – pulling together an action plan that would have started at the end of February, just after publishing the current year’s budget. Covid-19 has sent all of this out of the window – delaying our modernisation strategy, drawing officers who would be supporting the budget work onto response activity, placing savings programmes at risk, and reducing the potential for us to invest. There’s no doubt that all of this means we are now facing an even more significant financial challenge than had been anticipated, with our staff rightly focused not on this but on Covid-19. It is clear then that the impact the current crisis is having on our budget will be felt for many years, yet there is no sign of ministers acknowledging this basic fact.

The government needs to get its act together, and fast. Councils have been leading – along with our brilliant NHS colleagues – on the practical response to Covid-19 and we must be financed properly to do so. Urgent action is needed now to ensure our future sustainability. Without it, the amazing response work I’ve written about all week will simply not be deliverable whilst the fantastic work that our brilliant council staff do day-in, day-out in more usual times stands on the edge of a precipice.