A year after ministers promised they were ‘ready to do whatever is necessary to support councils in their response to coronavirus’, new analysis reveals a massive £5bn blackhole in local authority budgets. Latest figures released this month show that councils have spent £7.3bn extra on services due to coronavirus and have lost income of over £5.6bn, giving a total cost of £13bn.

Even after government support is taken into consideration, councils still face a funding gap of almost £5bn against a total annual spend of £45bn. A 11% hit to the council budget in Mansfield would mean a funding blackhole of £1.2m.

The analysis comes after figures have emerged revealing the staggering £2bn extent of crony contracts at the heart of the Conservatives Coronavirus response, and a former permanent secretary of the Treasury described the Government’s £37bn Test and Trace system as ‘the most wasteful and inept public spending programme of all time’.

Publishing the figure, Mansfield Labour’s Cllr Craig Whitby said,

“This government can find billions for a test and trace system that doesn’t work, millions for a shiny new briefing room for their press office, and even gave Dominic Cummings a 40% pay rise, yet when it comes to supporting Mansfield in tackling Coronavirus they tell us the cupboard is bare.

“Whether it’s incompetence or just the wrong priorities the truth is this government always leaves Mansfield at the back of the queue. We are facing a £1.2m blackhole here in Mansfield, local government across the country is now £5bn in the red thanks to Coronavirus in spite of government promises to support us every step of the way. Yet at the same time Conservatives can find £2bn in crony contracts for their mates. That tells you everything you need to know about how this government operates.

“Slashing our budgets while they waste billions elsewhere means frontline services like leisure services, community safety services and bin collections are put at risk. This government should keep its promise to the people of Mansfield and support their work to tackle this terrible virus.” 

ENDS

Notes to Editors

• Ministers promised to stand behind local authorities’ coronavirus-led budget reductions. On March 18^th 2020, ministers provided assurances that they would make sure the government provides “whatever funding is needed for councils to get through this and come out the other side”
  https://www.lgcplus.com/finance/government-will-provide-councils-with-whatever-funding-is-needed-18-03-2020

• Coronavirus has cost Local Authorities a combined £12.97bn in additional spending and lost revenues over the last year:
  https://www.gov.uk/government/publications/local-authority-covid-19-financial-impact-monitoring-information

• Government has reimbursed just £8bn of that:
  • £7.2bn total for LAs in 2020/21 (grant, LCTS funding)
  • +£800m estimated effect of 75% income replacement (paid in 2021/22 but for 20/21 losses)
  • =£8bn total for 2020/21 for English local authorities
    https://www.local.gov.uk/sites/default/files/documents/Alex%20Skinner.pdf

• Current declared costs/losses for English local authorities are £12.97bn, leaving an unfunded gap of £4.97bn:
  https://www.gov.uk/government/publications/local-authority-covid-19-financial-impact-monitoring-information

• A funding blackhole of £4.97bn is equivalent to 11% of the total annual service expenditure of councils in England.
  https://www.gov.uk/government/collections/local-authority-revenue-expenditure-and-financing#2020-to-2021

• The average council has a coronavirus blackhole of around 11%, which in Mansfield means a gap of £1.2m– as set out in this spreadsheet.

• The Conservatives have given more than £2bn in Coronavirus contracts to friends and donors:
  https://news.sky.com/story/covid-19-labour-calls-for-government-to-crack-down-on-the-cronyism-over-2bn-coronavirus-contracts-12212275

• Government is now planning to spent at least £37bn on test and trace, which has been described by the former Permanent Secretary to the Treasury as ‘the most wasteful and inept public spending programme of all time’
  https://www.standard.co.uk/news/politics/test-and-trace-wasteful-public-spending-former-treasury-chief-report-b923249.html
  https://www.huffingtonpost.co.uk/entry/test-and-trace-spending-ps37bn-budget-small-print_uk_60412920c5b601179ec35d4a