The Mayor of Tower Hamlets has set out the estimated cost of Tower Hamlets Council’s coronavirus response in an open letter to the Prime Minister and urged the PM to ensure local authorities are fully reimbursed for the vital work they are doing as part of the coronavirus response.

Mayor John Biggs warns that councils are already in a precarious position after ten years of Conservative funding cuts, and a failure to reimburse local government across the country for the coronavirus response could lead to some councils being pushed over the edge, potentially leading to vital services being cut back, significant job losses, and some councils simply struggling to survive at all.

The letter highlights that in March and April alone, Tower Hamlets Council estimates it will spend an additional £3.5m due to pressures caused by COVID-19, and at the same time the council’s income will reduce by £5.4m, for example because of reduced business rates and council tax income.

The 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.

Tower Hamlets Council has had to make £190m in savings since 2010 with a further £39m required by 2023.

Labour’s new Shadow Secretary of State for Communities and Local Government Steve Reed MP warned earlier this month that “councils are facing a financial black hole” and that the additional money announced by the Government for councils was a welcome start, but “nowhere near enough.”

Mayor of Tower Hamlets John Biggs said: “Local councils are spending significant sums of money on vital services as part of the coronavirus response and it’s absolutely right that we spend this money, but we also need the reassurance that Government will reimburse us.

“Councils were told at the beginning of this crisis to spend what they need in order to tackle the virus, and this is a pledge that must be kept. The alternative would mean councils struggling to survive and withdrawing services right at the time when we need them to be supporting our communities through a recovery.”

Cllr Candida Ronald, Cabinet Member for Resources and the Voluntary Sector, said: “After nearly ten years of funding cuts, local authorities across the country are already in a precarious position and the additional pressure of the coronavirus response could push some over the edge. We welcomed the recently announced additional funding from the Government, but ministers still aren’t meeting their pledge to reimburse councils for the vital work they’re doing. The future of everyday council services are in jeopardy if this pledge isn’t met.”

 

Full text of the letter sent:

Covering the costs of coronavirus

I was very glad to hear the news that you had been discharged from hospital and I send my best wishes for your continued recovery.

I am writing to you at this critical time, as indeed many other council leaders are, to express my concerns that there continue to be question marks over your Government’s pledge to reimburse local authorities for the money spent and income lost as a result of the coronavirus crisis.

Local councils have a huge role to play in tackling coronavirus, through our emergency planning function, our social care services, administering grants to businesses to keep them afloat, and many other services. Councils are working flat out and are providing invaluable services for our communities; our staff are working incredibly hard and I thank them for everything they are doing.

However all of this costs significant sums of money and the Government must meet its promise to reimburse councils for these additional costs. Failure to do so would have catastrophic consequences for local authorities and all of the vital services they provide.

Recently my council submitted to the Government a summary of the projected financial impact of COVID-19 on Tower Hamlets Council. It highlighted, amongst other things:

  • The council received nearly £10.5m of the Government’s £1.6bn emergency funding to help local authorities respond to the crisis;
  • That in March and April 2020 alone we estimate:
    • That we will spend an additional £3.5m due to pressures caused by COVID-19, i.e. nearly a third of the initial emergency funding tranche you granted;
    • That at the same time our income will reduce by £5.4m.
  • For the full year (2020-21), we estimate:
    • That we will spend an additional £24.4m due to pressures caused by COVID-19;
    • That at the same time our income will reduce by £34.6m.

These are eye-watering sums and whilst it is necessary that we spend to tackle the crisis and support our communities, clearly this places our council budget in a precarious position as it comes on top of the £190m in savings we’ve had to make since 2010, with an additional £39m required by 2023.

It is vital that councils are reimbursed by the Government for this, and we were repeatedly reassured by the Secretary of State for Communities and Local Government that this would be the case.

I was glad to hear that you have committed an additional £1.6bn for local authorities, however given the scale of the financial challenges faced by every council, we are deeply concerned that this additional money will not go far enough. Indeed if this additional money is distributed along the same lines as the last tranche, Tower Hamlets Council will still be significantly out of pocket.

Local councils are spending significant sums of money to tackle COVID-19, and it is absolutely right that we do so, but we need to be properly backed up by central government.

The alternative will be that local councils will fall off a cliff edge, the impact of which would be enormous. Across local government we could expect to see vital services cut, significant job losses, and some councils would simply struggle to survive.

I look forward to hearing from you. Given the significant public interest in this matter I will be publishing this letter.

Yours sincerely,

Mayor John Biggs

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