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New local govt £: https://www.gov.uk/government/news/comprehensive-new-funding-package-for-councils-to-help-address-coronavirus-pressures-and-cover-lost-income-during-the-pandemic
- £500m unringfenced grant
- Govt will replace 75% of lost income from sales, fees, and charges (after first 5%)
- Councils allowed to balance books over 3yrs rather than 1yr
What does it mean and how much difference will it make?
- £500m unringfenced grant
- Govt will replace 75% of lost income from sales, fees, and charges (after first 5%)
- Councils allowed to balance books over 3yrs rather than 1yr
What does it mean and how much difference will it make?
Analysis:
- £500m for all councils in England: doesn't sound very comprehensive - sounds like a sticking plaster...
(which was a common govt response before the pandemic, too, esp for adult social care: https://www.instituteforgovernment.org.uk/blog/hope-emergency-cash-injections-social-care-end-soon)
- £500m for all councils in England: doesn't sound very comprehensive - sounds like a sticking plaster...
(which was a common govt response before the pandemic, too, esp for adult social care: https://www.instituteforgovernment.org.uk/blog/hope-emergency-cash-injections-social-care-end-soon)
- £500m is probably about a month's worth of cost of responding to Covid-19
- @mhclg figures show that councils spent £602m in April 2020 and £568m in May to respond to Covid-19 (40% of which on adult social care)
[ https://www.gov.uk/government/publications/local-authority-covid-19-financial-impact-monitoring-information, Tables 13 & 19]
- @mhclg figures show that councils spent £602m in April 2020 and £568m in May to respond to Covid-19 (40% of which on adult social care)
[ https://www.gov.uk/government/publications/local-authority-covid-19-financial-impact-monitoring-information, Tables 13 & 19]
[Sidenote: lost income and extra costs between March and May were just over £3.2bn - which on surface suggests that additional govt funding (almost) covered these...
...BUT the way that £3.2bn was distributed did not cover all indiv councils' costs: https://www.lgcplus.com/finance/counties-hit-back-as-mhclg-publishes-covid-returns-data-22-06-2020/
And last-min emergency grants are not good for planning or really "whatever it takes", which govt promised at start: https://twitter.com/jesstud/status/1278623520176713728]
And last-min emergency grants are not good for planning or really "whatever it takes", which govt promised at start: https://twitter.com/jesstud/status/1278623520176713728]
Lost income compensation: will help all councils, but district councils most of all (they are on avg more reliant on income from sales, fees, and charges: https://www.ifs.org.uk/publications/14893)
N.b. income accounted for 15.8% of total council revenues in 2017/18: https://www.instituteforgovernment.org.uk/publication/performance-tracker-2019/neighbourhood-services
N.b. income accounted for 15.8% of total council revenues in 2017/18: https://www.instituteforgovernment.org.uk/publication/performance-tracker-2019/neighbourhood-services
What about lost council tax and business rates?
Govt will agree "an apportionment of irrecoverable [2020/21] council tax and business rates losses" in next Spending Review
TL;DR - 'we're parking that question' atm
Govt will agree "an apportionment of irrecoverable [2020/21] council tax and business rates losses" in next Spending Review
TL;DR - 'we're parking that question' atm
Balancing books: govt "proposal for a phased repayment of council tax and business rates deficits over 3 years"
This matters: normally council CFOs have to assure themselves that their council is solvent over the whole financial year - cannot assume govt will bail out each month
This matters: normally council CFOs have to assure themselves that their council is solvent over the whole financial year - cannot assume govt will bail out each month
Which is why, despite £ injections, some councils are still considering whether they need to issue a S114 - bankruptcy - notice: https://www.bbc.co.uk/news/uk-53069772
So presumably extending time to balance books makes this less likely?
So presumably extending time to balance books makes this less likely?
Overall:
- Cash for a month's worth of emergency costs, an answer on lost income, no answer yet on lost tax revenues
- Extension of balancing books requirement makes bankruptcies less likely
- Some more certainty but a stretch to call "comprehensive"
- Cash for a month's worth of emergency costs, an answer on lost income, no answer yet on lost tax revenues
- Extension of balancing books requirement makes bankruptcies less likely
- Some more certainty but a stretch to call "comprehensive"
Welcome corrections if I've got anything wrong
(May be of interest @joannepittcipfa, @andrewnburns, @NickGolding, @JenWilliamsMEN, @McDonaldGraeme, @adamjlent etc.)
(May be of interest @joannepittcipfa, @andrewnburns, @NickGolding, @JenWilliamsMEN, @McDonaldGraeme, @adamjlent etc.)
