Sunak urged to fill £5bn funding gap for local councils as coronavirus crisis hits town halls

A cross-party group of MPs is putting pressure on chancellor Rishi Sunak to fill a £5bn gap in funding for local councils, as town hall chiefs warn that the additional burden from coronavirus has left their finances “stretched to the maximum”.

A second £1.6bn tranche of funding promised by communities secretary Robert Jenrick to help councils deal with Covid-19 has yet to reach them, and a survey of local authorities is understood to show that additional costs and lost income due to the virus amount to four times the sums provided by government.

While local government bosses have welcomed the injection of £3.2bn in central government funds to cover extra costs from coronavirus, there is growing anger in town halls at a Whitehall narrative that their financial worries have been dealt with.

The 26 MPs who signed the letter to Mr Sunak and Mr Jenrick highlighted the extra burden on councils in supporting care homes, sourcing and distributing PPE, supplying emergency food packages and distributing business grants at a time when revenues from car parking, leisure centres, planning applications and other sources has plummeted.

The signatories, led by former Liberal Democrat leader Tim Farron, include the party’s current acting leader Ed Davey, senior Labour backbenchers such as Hilary Benn and Sarah Champion, Green MP Caroline Lucas and SDLP leader Colum Eastwood. The letter warned: “On the ground, we are hearing the fear and anxiety of our councillors as they battle to keep our communities safe, healthy and housed.

“An increase on the demand for local government services is likely to be a long-term outcome of the pandemic, not just a short-term consequence of the current demands.

“If we are going to sustain our social care sector, provide adequate support for the education of our children and ensure that everyone has a roof over their heads, we must address the shortfall in funding to councils as a matter of urgency. We must bridge the gap.”

Mr Farron said: “From day one, local authorities have stepped up to deliver local support through the Covid-19 crisis. They have gone above and beyond, from efforts to source protective equipment for frontline workers, to supplying emergency food packages to distributing business grants and so much more.

“These efforts have helped protect some of the most vulnerable, and they must continue.”

And he warned: “Local authorities cannot keep going on a shoestring budget. The shortfall many are already facing is substantial and growing. Without an emergency cash injection, and a long-term sustainable funding plan, the lifelines offered by local authorities will no longer exist. Our communities will suffer enormously as a result.

“That is why we are calling on the government to commit to a sufficient long-term funding settlement for councils as an immediate priority. This is the only way to ensure our councils can keep vital services running through the current crisis and in the future.

“We are enormously grateful to those on the frontline, for example those working in social care, but the tragic reality is the social care system will collapse if our local councils are not there to fund it.”

A spokesperson for the Local Government Association said: “Local government continues to lead local efforts to beat this virus but is being stretched to the maximum.

“Many councils are facing increased cost and demand pressures at the same time as a significant drop in income. This is unsustainable.

“We are pleased the government has provided more desperately-needed new funding for councils.

“Government must provide ongoing and consistent funding to meet all the extra costs local authorities are facing to cope with Covid-19 and compensate for lost income. Councils will need up to four times the funding they have been allocated so far.”

A government spokesperson said: “We have announced a total of £3.2bn of funding for councils to support their response to the pandemic.

“This is an unprecedented package of support which responds to the range of pressures councils have told us they are facing and will support them to protect vital services.”