Agenda item

The Chair invited Nicola Morton to introduce the report.

Nicola outlined the Government’s announcements and financial commitments affecting local government since the Covid-19 crisis had begun, including its package of measures to help local authorities and businesses. Of particular interest to Resources Board members were the announcements that the Review of Relative Needs and Resource and 75 per cent business rates retention would no longer be implemented in 2021-22.

Nicola then highlighted the LGA’s key messages in its dealings with Government which she said were being kept under constant review. These were a) that the Government needed to provide a cast-iron guarantee that all costs associated with Covid-19, additional ‘business as usual’ costs, and losses of income for councils during the crisis would be covered; and b) the additional financial support received so far from Government was very welcome. However, based on council’s financial returns to date, they would need 3 to 4 times the £3.2 billion already allocated. Nicola said that loss of income accounted for two thirds of the funding gap councils were currently experiencing.

Nicola reported that so far, 170 councils had provided the LGA with their MHCLG financial returns and she urged the remaining councils to share theirs in order to improve the evidence base. She said that the LGA was now working on 12 local authority case studies to provide more detail to Government on the challenges being faced.

Nicola said that most of the LGA’s work had so far concentrated on the short-term impacts of Covid-19 on councils but they were now starting to think about the ‘recovery’ phase and longer-term repercussions. She invited members to input into what this recovery work could focus on and said these would be reported back to the Executive Advisory Board meeting on 15 May 2020. In particular, Nicola flagged up HM Treasury’s review of the ‘Green Book’ on allocation of capital resources which the LGA was currently engaging with.

Following Nicola’s introduction there was a discussion during which Members raised the following points:

·       The LGA needed to make a stronger case to Government about the serious existential threat to local government if cost pressures and losses of income were not fully covered. It was reiterated that 3 or 4 times the amount of funding currently provided, would be required. It was suggested that the most effective role for the LGA was to collect more data from councils and to keep its message to Government simple and clear. In addition, the LGA needed to devise a clear lobbying strategy, starting with an approach to the Secretary of State and the Chancellor.

·       More clarity and certainty and a long-term funding solution was needed from Government to enable councils to plan properly and avoid having to make in-year budget cuts that could hamper efforts at recovery.

·       It was suggested that the LGA could ask the Government to write-off Public Works Loans Board debt in the same way that NHS Trust’s debt had been written off by Government. Other members disagreed with this proposal. In addition, it was suggested that councils should be allowed to capitalise any losses.

·       In relation to support for small businesses and the proposed 5 per cent uplift in business support, it was suggested that councils would lose out if the original baseline from the start of the lockdown was used.

·       Councils were facing significant additional costs associated with the recovery of unpaid council tax and business rates. Could the LGA ask Government for these to be reimbursed?

·       The lockdown had pointed to more effective and environmentally sound ways of working for councils such as remote meetings and more cycling and walking. These could reduce costs in future.

·       Councils such as Crawley, Luton and Manchester, which relied heavily upon airport income, had been particularly badly hit.

·       If costs were not going to be met in full by Government, would they instead provide further flexibilities to enable councils to spread them over a longer period?

Nicola concluded by reiterating the importance of councils completing their financial returns to MHCLG to enable them to make their case more effectively to the Treasury.

Decisions

Members of the Resources Board agreed the next steps outlined in paragraph 27 of the report and recommended that the LGA is stronger in its lobbying on for local government to be compensated for additional costs and lost income.