Tower Hamlets Council has been handed £1.4m less in the second tranche of emergency funding received from the Ministry of Housing, Communities and Local Government when compared to the first tranche received.

The first tranche (a total of £1.6bn) was allocated based on a mixture of Adult Social Care Relative Needs Formulas and the 2013/14 Settlement Funding Assessment, a measure of general needs. However, the second tranche (a further £1.6bn) was based on a per-capita basis, failing to take into account the needs of areas in deprivation.

Councils in areas of deprivation, including Tower Hamlets, have been handed a £126m cut overall after the second payment of emergency funding made by the Housing, Communities and Local Government Secretary to fight covid-19, despite many having the highest infection rates in the country, according to analysis from the Local Government Association Labour Group.

Tower Hamlets Council received £10.4m in the first tranche compared with £9m in the second tranche, the equivalent of a 13.9% cut.

According to the cross-party Local Government Association, councils in England are facing a total financial black hole of between £10 and £13 billion because of the cost pressures of fighting covid-19, such as the sourcing of Personal Protective Equipment, and from lost income and savings opportunities. So far, the government has allocated just £3.2 billion to councils to help them through the crisis.

Tower Hamlets Council estimates for the full year (2020-21), it will spend an additional £24.4m due to pressures caused by COVID-19, while income will reduce by £34.6m. This comes on top of the £190m in savings the council has been forced to make since 2010 with a further £39m required by 2023.

The Communities Secretary Robert Jenrick said that the Government “would stand behind councils and give them the funding they need” but has since suggested that councils will not be fully reimbursed for all their covid-related costs.

Labour has warned that the black hole, if not filled, could see councils have to cut essential services like adult and children’s social care face cuts by over 20 per cent to stave off bankruptcy.

Mayor of Tower Hamlets John Biggs said: “The Government’s failure to take deprivation into account of the second tranche of emergency funding is another sign that ministers are backtracking on their pledge to fully reimburse councils for the coronavirus response. The impact of leaving councils to struggle on their own will be devastating, particularly as it’s these very councils that will have a vital role to play in supporting our communities during the recovery.”

Cllr Candida Ronald, Cabinet Member for Resources and the Voluntary Sector, said: “The kind of services that local councils will be able to run for our communities will look very different in future if the Government fails to support councils during and after the crisis. The overall support package that Government has provided to councils has been disappointing, and this latest analysis shows the Government is actually cutting funding to some of the most deprived communities across the UK.”

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