£732m cost to Greater Manchester councils from coronavirus

Analysis by Greater Manchester's Combined Authority shows the financial impact of coronavirus for the ten borough councils will be around £732m.

The estimate is made up of additional costs faced in delivering Greater Manchester's response to the crisis of £236m, together with lost revenues of £496m.

The analysis shows when taking into account government grants and reserves, the total net deficit facing local government finances is £368m.

The research is based on current rates of infection and expectations around lockdown and does not take into account a second wave of cases or any increase in lockdown restrictions.

The ten councils across Greater Manchester also estimate that they will face an additional costs of £225m by the end of the year with shortfalls occurring due to business rate and council tax losses, of which the report states 69% of local authorities across Greater Manchester rely on council tax income.

Council tax receipts have fallen due to people's incomes being adversely affected by Covid-19, leading to an increase in those eligible for council tax support, with others struggling to pay bills or deferring or defaulting on payments.

The report anticipates a significant loss in commercial income in part because of the investment by all ten councils in Manchester Airport Group, which employees 20,000 people on site with a further 25,000 indirect jobs.

The anticipated income loss from MAG to the ten local authorities in dividends alone totals over £100m. The most severely hit council to be affected will be Manchester City Council, who have a 35% equity stake.

The Ministry for Housing, Communities and Local Government (MHCLG), has provided two tranches of funding to Greater Manchester councils totalling £167.68m, which together with other national funding for track and trace, infection control and hardship grants will reduce the impact on finances from £634m to £390m.

But, GMCA say the financial impact of the loss of at least two years dividend cannot be sustained without a significant impact on the council's budget position.

Currently, a total of £92m of reserves have been allocated by all ten councils to help plug some of the funding gaps.

Andy Burnham, Mayor of Greater Manchester. Credit: PA

Mayor of Greater Manchester, Andy Burnham, said:

The GMCA and Transport for Greater Manchester (TfGM) have also been impacted by the Covid-19 crisis, with additional costs incurred and a fall in income.

David Molyneux, Leader of Wigan Council and Portfolio Lead for Resources added: