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Government announces new coronavirus refund package for councils
An additional £500m in emergency funding for councils has been announced, alongside a new scheme that will reimburse local authorities for income lost during the coronavirus pandemic.
Housing secretary Robert Jenrick announced today that councils in England will receive an extra £500m in non-ringfenced funding, bringing the total amount that has been given to local authorities to cope with various pressures to £4.3bn.
The government is also introducing a new scheme to help reimburse councils for income that has been lost during the COVID-19 crisis.
Under this scheme, where losses are more than 5% of a council’s planned income from sales, fees and charges, the government will cover them for 75p of every pound lost.
This will cover loss of income from car parks, museums and other cultural assets.
It comes one day after the Local Government Association published an analysis of local authority returns that showed councils were predicting a total financial hit of £10.9bn during the coronavirus pandemic.
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Of the £10.9bn, £4.4bn was a result of additional costs, such as social care and homelessness services, and a predicted £6.5bn loss in income.
Over half of the predicted loss in income (£3.7bn) is the result of lost council tax and business rates income this financial year.
The government said it will determine what support councils need to meet the pressures of income loss from council tax and business rates at the next Spending Review.
As part of this it has announced a proposal for a phased repayment of council tax and business rates deficits over three years, rather than requiring complete repayment of deficits next year.
The Barnett formula will apply to the additional funding being provided by the UK government, meaning the Scottish government will receive roughly £50m compared with £30m for the Welsh government and £15m for the Northern Ireland Executive.
Mr Jenrick said: “Councils are playing a huge part in supporting their communities during this pandemic.
“From supporting the most vulnerable and keeping vital services running to operating local track and trace, council workers have been at the forefront of this great national effort and are the unsung heroes of this pandemic.
“Today I am providing a further package of support that takes our support for councils during this pandemic to £4.3bn to help meet the immediate pressures councils are facing. I know that the loss of revenue from car parks and leisure centres has created huge difficulties, so I am introducing a new scheme to help cover these losses.
“This government will continue to stand shoulder to shoulder with councils and communities as we recover from this pandemic, as we renew our commitment to unite and level up the country.”
