Exclusive: Councils in England and Wales face £3.4bn funding black hole
Councils across England and Wales have told ITV News the coronavirus pandemic has already left them with at least a £3.4billion hole in their finances and without more government help they will have to make severe cuts to services.
More than 200 councils have responded to our survey and 16 of those say they've already discussed issuing a 114 notice, which bans all new expenditure except safeguarding vulnerable people and statutory services. The only other time that has happened in history is with Northampton in 2018.
Eighty-three per cent of councils say the government hasn't given them enough to fill the shortfall and 22 per cent of councils have told us that if that doesn't happen soon, they'll have to make cuts to services.
Stevenage Borough Council is losing £1m a month because of the virus and they estimate they'll have a funding gap of £3.6m for the year. Normally, car parks are a big earner in the commuter town, but with more people working from home they're sitting empty, which has already cost the council almost £1m.
In April alone, 18 per cent of residents stopped paying their council tax, rental income is down and the town's leisure centre is closed.
Costs are also rising - the council is spending £5,000 a day putting 45 homeless people up in hotels to ensure some of those most vulnerable are off the streets during the pandemic.
Sharon Taylor, Leader of Stevenage Borough Council, told me reserves are running low and if they don't receive more funding soon, cuts are coming.
"We absolutely have to balance our budget every year, we have no option but to do that," she said.
"I don't want to cut services, we'll do everything we can first, but at the end of the day if we can't find the funding and the government doesn't put extra funding in, we will have to look at services."
The council's domestic abuse service is one area that could face cuts, despite a huge increase in demand. There has been a 90 per cent increase in cases since lockdown started, meaning 78 victims needed support and housing in April alone.
'If the Government doesn't put extra funding in, we will have to look at cutting services' - Stevenage council leader Sharon Taylor
However, it is a discretionary service that the council does not have to provide. Mel Bingham, a support worker, told me: "I have real concerns that it is going to come to a point where we are going to run out of money and cuts are going to be made to an essential service, every part of the service that we provide is essential to the people we are supporting."
In Liverpool, the city's leaders have claimed in a letter to the Prime Minister that the impact of coronavirus will be felt more in Merseyside than anywhere else in the country.
In the letter, Liverpool City Region metro mayor Steve Rotheram and leaders of Liverpool, Wirral, Knowsley, Sefton, St Helens and Halton councils said the region was facing the biggest challenge of the UK to recover from the Covid-19 crisis and is facing a bill of £341 million over six months.
Politicians say factors including a high prevalence of illnesses such as chronic obstructive pulmonary disease, high levels of deprivation and high demand for adult social care mean the area, which has experienced higher than average infection and mortality rates, would be worse off than others. They say £100 million allocated from central government will only cover 30% of their needs.
Mr Rotheram told ITV News: "The government should do what the government said it was going to do. You can't stand up and say whatever it takes and then not mean it. We need the government to provide the funding support for our six local authorities that was promised so that they can carry out all the things they need to ensure that coronavirus is tackled."
At Huyton Hey Manor care home in Knowsley, 20 of the 28 residents have tested positive for coronavirus, and four have died.
Senior Carer Susan Eakins details problems facing social care during coronavirus pandemic
Senior Carer Susan Eakins told ITV News: "I know we do it all the time and we expect it in our job but in this moment in time, it's been so hard and we've cried, we've had to let it out. We're struggling anyway, all social care is, and how are we going to carry on doing the job we're doing to the affect we do it, if things are cut?"
Cllr Richard Watts, Chair of the Local Government Association's Resources Board, said: "The Secretary of State promised that councils will get all the resources they need to cope with this pandemic. This commitment must be rock-solid and include the full cost to councils of meeting Covid-19 pressures."
He added: "Without this, councils and the services our communities rely on will face an existential crisis... This would lead to spending blocks and in-year cuts to the vital local services that are supporting communities through this crisis and the national effort to beat this deadly disease."
Councils across Wales told ITV News they have a £74.5m hole in their finances because of the virus.
Councillor Anthony Hunt, finance spokesperson for the Welsh Local Government Association, said: “Whilst we are seeing day-by-day the heart-breaking human cost of coronavirus, there is a risk that the disease will cast its long shadow over essential local services for years to come, as council budgets are strained by the dual pressure of huge extra costs and loss of revenue."
He added: "Councils and Welsh Government will continue discussions to explore how to protect our vital local services in the tough months ahead and beyond.”
A Welsh Government spokesperson said: "We recognise the funding pressures the coronavirus pandemic has placed on local authorities and the huge amount of work local government is doing to ensure public services continue at this time.
"We have made £110m available immediately to help local authorities with additional costs and brought forward £526m of revenue support grant payments from May and June to support them. We will publish a supplementary budget this week, which will include up to £78m of further funding for local authorities.”
A spokesperson for England's Department for Housing, Communities and Local Government said: "Council workers are the unsung heroes as we tackle this pandemic.
"That’s why we’re providing councils with an unprecedented £3.2 billion, plus £600m to fight infections in care homes.
"This gives councils the resources that they need to tackle the immediate pressures they have told us they’re facing as a result of coronavirus.
“This is in addition to English councils' core spending power rising by over £2.9 billion this financial year and further emergency funding, including £300 million to support test and trace.
"In total, the government has provided almost £27 billion to support local councils, businesses and communities in fighting the pandemic.”
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