Responding to COVID-19: insight, support and guidance

£1.2bn gap in council funding remains after COVID funding announcement

02-07-2020

Communities Secretary Robert Jenrick has today announced a further package of support for councils in their response to COVID-19. While the support is welcome, it does not go far enough, with a £1.2bn financial gap still remaining.

CIPFA CEO Rob Whiteman said:

"Throughout the pandemic councils have acted in good faith, doing whatever it takes to beat COVID-19 in their communities. While the announcement of £500m additional funding is of course welcome news for councils, this does not cover the full extent of the costs they are incurring this year as a result of the pandemic, particularly cost pressures felt in social care.

"Covering 75% of income losses from fees and charges leaves a significant £0.8bn financial gap. A further challenge is lost income from council tax and business rates. Deferring this over three years rather than funding the loss kicks the problem into the long grass, but is nonetheless welcome to avoid pressure on council tax calculations now.

"The government has committed to addressing some of these challenges in the Spending Review. However it is clear that over time MHCLG has moved away from an initial vow to support local authorities in full, to promising future attention in the context of 'burden sharing'.

"Now that the government has today finalised its package, this autumn's budget round where councils plan for 2021/22 and beyond will be the toughest they have ever experienced. Residents up and down the country are likely to experience service redirections as councils meet their statutory duty to balance budgets."

ENDS

For further information, or to arrange an interview, please contact the CIPFA press office on T: 020 7543 5737 or E: ashleigh.moore@cipfa.org

Notes to editors:

  • The full government announcement can be found here.
  • Our assessment of the remaining funding gap is based on LGA figures, which can be found here.
  • The income loss scheme will involve a 5% deductible rate, whereby councils will pay the first 5% of all lost planned sales, fees and charges income, with the government compensating them for 75p in every pound of loss thereafter.

About CIPFA

CIPFA, the Chartered Institute of Public Finance and Accountancy, is the professional body for people in public finance. CIPFA shows the way in public finance globally, standing up for sound public financial management and good governance around the world as the leading commentator on managing and accounting for public money.