Financial Impact of COVID-19 on Local Authorities in England
Dear constituent,
Thank you for contacting me about the financial impact of COVID-19 on local authorities in England.
Councils are on the frontline delivering the services that people rely on and which support and enrich our communities every day. I pay tribute to councillors and council staff who, despite a decade of austerity, work hard to keep our local public services going.
In the wake of coronavirus, local councils have stood up to the challenge. They have continued to provide social care for elderly and disabled people under very difficult circumstances, found accommodation for rough sleepers at short notice, administered billions of pounds of business rates relief in grants for local businesses, and they have co-ordinated support for people in vulnerable groups who have been shielding.
In your letter, you raise concerns about local authority borrowing from the Public Works Loan Board (PWLB). As of 30 June, the total amount owed by local authorities in England to the PWLB was £70.23 billion. I share your concerns that councils have been underfunded over the last decade. Indeed, local government has lost £16 billion in central Government funding between 2010 and 2020.
Despite financial pressures, I believe the response of local authorities during the COVID-19 pandemic has been remarkable.
The Government said it has provided £4.3 billion to councils in response to COVID-19. However, analysis by the Local Government Association (LGA) observes that the financial pressure of meeting the costs of tackling COVID-19, including lost income from council tax and other revenues, totals between £10 billion and £13 billion. The LGA has warned that councils face an overall funding gap of £7.4 billion.
The coronavirus pandemic has demonstrated beyond all doubt just how important local authorities are in holding communities together. I believe it is vital that councils receive the funding they need during and beyond the pandemic. I will press the Government to provide the national leadership, focus and attention local government and council staff deserve and to make good on its promise to do “whatever it takes” to support local authorities.
Thank you once again for contacting me about this important issue.
Yours sincerely,
Peter Dowd MP