Tower Hamlets Labour has today launched an urgent appeal calling on the Government to plug the gap in Tower Hamlets Council’s finances caused by Covid-19, with the local authority facing a financial black hole of £30m.

Last week the council set out the financial impact of the coronavirus pandemic, highlighting that figures from the first four full months of lockdown show increased spending combined with a loss of income has meant that the council has had to spend £60m more. With the government only committing so far to provide an additional £30m, this leaves a deficit of £30m.

This £30m hole piles even more pressure on to local councils after 10 years of austerity cuts to council funding has seen council budgets slashed. The cost of Covid on top of austerity means that the council has to find a staggering £60m by the end of the financial year 2023/24 unless the Government sticks to its promise to reimburse councils. The council has already had to save £190m through austerity cuts to funding and increased demand since 2010.

The Mayor of Tower Hamlets John Biggs also warned that the financial picture for local authorities is evolving rapidly and the impact on Tower Hamlets could deteriorate even further, particularly in the event of a second wave.

Despite the Government’s promise to reimburse local authorities for their coronavirus response, Tower Hamlets Council has only received £30m from the Government so far, significantly less than the additional costs and reduced income that the council faces leaving the council’s finances in a serious position.

Earlier this month, the Local Government Association warned that councils across the country have incurred £4.8 billion of extra cost pressures and income losses as a result of the pandemic, and face a funding gap of £7.4 billion which threaten the “financial sustainability” of local authorities.

The local petition, launched today, calls on the Government to reimburse local councils for their coronavirus response in full and warns about the threat to local services if ministers fail to act.

Mayor of Tower Hamlets John Biggs said: “The Government promised that local councils would be reimbursed in full for the cost of Covid and that we should spend whatever it takes. It is outrageous that the Government is backing away from this pledge and leaving councils in the lurch.

“A funding gap as big as this, on top of the ten years’ worth of austerity cuts that councils have faced, will have a devastating impact on our services and will threaten the very financial sustainability of councils right across the country. An added worry is that the financial picture is constantly evolving, and the numbers could very easily get worse.

“Ministers have been deaf to the risks and challenges we face, so we’ve launched this petition to show the strength of feeling across our borough about the funding crisis and what it will mean for Tower Hamlets.”

Councillor Candida Ronald, Cabinet Member for Resources and the Voluntary Sector, said: “Whilst the Government has provided some extra funding for local authorities, it’s not nearly enough to plug the gap and certainly not in Tower Hamlets where we face having to make huge savings over the next few years. This flies in the face of their pledge to support councils during and after the pandemic.

“Time after time we’ve seen the Conservative Government’s contempt for our local councils, and now they face a major funding crisis. Councils simply won’t be in a position to support our local communities through the economic crisis of Covid if they’re struggling just to stay afloat.

“As a council we’re doing emergency budget planning right now as the situation is so serious, but the Government still has time to step up and fulfil their promise before frontline services up and down the country suffer even more.”

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