Covid-19 crisis means local British authorities could go bankrupt, mayors warn | Local government

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The mayors of some of the largest cities in England warn that local authorities risk bankruptcy with potentially devastating consequences for communities, unless the government takes immediate action.

As the impact of the Covid-19 crisis hits local authorities, the mayors of London, Greater Manchester, Sheffield and Liverpool have launched a joint appeal to highlight the seriousness of the problem and urge Boris Johnson to respond.

“Unless the government acts immediately to support local and regional governments in England, there is a very serious risk that the economic recovery of Covid-19 will be stifled by a new era of austerity – something that the Prime Minister promised minister would not happen, “said London mayor Sadiq Khan.

The situation is so serious that some local councils may be threatened with bankruptcy, warned mayors. Greater Manchester Mayor Andy Burnham said support is needed in the north of England now to keep the “2020s from being as bad as the 80s”.

Speaking exclusively to the Guardian, they warned that the situation was now critical and stressed that councils would be forced to plan for large-scale spending cuts in the coming weeks unless the government takes urgent action to support local and regional authorities.

“The hard truth is that with business rates, municipal taxes and transportation fare revenues all falling significantly due to this virus, local authorities will have no choice but to start to make significant savings in a few days or weeks in order to balance our budgets, “said Khan. . “However, with good financial support from the government, regional mayors can play a huge role in shaping an economic recovery that creates a fairer and greener country.”

Communities Secretary Robert Jenrick previously said councils will get the funding they need and Boris Johnson said there will be no return to austerity while the country grapples with the pandemic . But mayors said the government has so far refused to commit to providing sufficient support to local and regional authorities responding to the pandemic. They also suffer from a drop in revenues from business rates and municipal tax. Transportation fare revenues dropped 90%.

James Jamieson, president of the Local Government Association and conservative head of the central council of Bedfordshire, estimated that the councils will face costs of almost £ 13 billion to cope with the crisis this year.

Johnson said on questions to the Prime Minister on Wednesday that he was announcing additional £ 63 million in social assistance which the councils could use at their discretion to help vulnerable families. The central government also gave £ 3.2 billion to local authorities to deal with the coronavirus crisis. The councils will also be allowed to carry over £ 2.6 billion on corporate rates to the central government and they received £ 850 million in welfare subsidies in April.

Liverpool area councils have estimated their Covid-19 bill to be around £ 341 million over the next six months. With only £ 100 million allocated to date from the central government, there is growing concern that local authorities in the region are suffering from a deficit of almost a quarter of a billion pounds.

The combined authority is also spending an additional £ 5 million per month on lost transport revenue and revenues from the Mersey tunnel are expected to drop by £ 10 million this year. In addition, Merseyrail has not received any government bailouts.

Liverpool area mayor Steve Rotheram said: “At the start of this crisis, local authorities were asked by the government to do” whatever it takes “to support communities. That’s what we did – and the response from our local councils was simply incredible. But that answer comes at a cost – and the numbers involved are simply surprising.

“Add to that the drop in revenues from corporate tariffs, municipal tax, transport tariffs and tunnel tolls, without substantial additional funding from the government, it will then be impossible for local authorities to balance their budgets while now the services. “

Burnham said, “Recovery will have to be built from the bottom up and the boards will be crucial to that. The poorest communities have been the hardest hit by the health crisis and may be even harder hit by the economic crisis.

“Support is needed now to prevent the 2020s from being as bad as the 1980s in the north. Boards will be at the heart of the recovery and the government must fund them properly. “

Sheffield area mayor Dan Jarvis said, “Prime Minister has promised that there will be no return to austerity, but if local government does not get the support it needs , this is exactly what our communities will face. “

A spokesperson for the Department of Housing, Communities and Local Government said: “We are offering councils unprecedented support, including emergency funding of £ 3.2 billion, to cope with the pressures facing they faced us.

“In total, the government has provided more than £ 27 billion to support local councils, businesses and communities in the fight against the pandemic, including £ 600 million to help reduce the rate of infection in the care homes and £ 300 million to support tracking and tracing.

“The government will continue to work closely with the boards to develop an ongoing costing as they support their communities during this national emergency.”

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