Coronavirus funding 'black hole' could be 'catastrophic' for St Helens

On Wednesday, local authorities in England were given their funding allocations from the government’s £1.6 billion in emergency funding.

The additional cash is on top of the £1.6 billion already provided to councils to deal with the pandemic.

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But some councils – including St Helens – have come in for a shock after learning their allocations have taken a hefty reduction from the previous round.

This time, the government said funding will be distributed based on population and the latest assessment on the challenges each local authority is facing.

St Helens will receive just short of £5 million – 22 per cent less than the £6.4 million it received from the first lot of funding.

By the government’s own calculations, the estimated loss of income in St Helens from coronavirus over the coming months will be £37 million – meaning the council will have to make up the remaining £26 million itself.

“The reduction in funding for St Helens is a kick in the teeth for our key workers and the essential services they are providing for local residents through this crisis,” said Cllr David Baines, leader of St Helens Council.

“By September, St Helens will be facing extra costs and losses due to fighting COVID-19 of £37 million.

“With extra funding announced by government of only £11.3 million we’ll be looking at a blackhole of almost £26 million.

“This crisis has shown everyone very clearly who our key workers are and the jobs that really matter, and they include council staff and the services they provide.

“Social care, waste collections, highways repairs, school staff and maintenance, employment advice and support, licensing, trading standards and consumer protection, and much, much more – this is what a local council provides.

“It’s all essential, and it all needs fair and certain funding.”

St Helens Council leader David Baines

The Labour council leader warned the loss in income from the pandemic, coupled with a decade of “chronic underfunding”, could have dire consequences, and called for the government to properly support local government.

“Before COVID-19 hit us, St Helens had suffered 10 years of chronic underfunding and our budget for 2020-21 already contained £5 million in savings and another £5 million use of one-off emergency reserves,” Cllr Baines said.

“Add another £26 million on top of these existing pressures and a difficult situation becomes potentially catastrophic.

“We applaud our key workers and services every Thursday night, and it’s time for the government to give them the funding and support they deserve.”

In a joint response to the government, local leaders across the city region have challenged the government’s methodology.

Previously, the allocations were not based on population and reflected the pressures individual areas were facing.

Wednesday’s announcement, made by Ministry of Housing, Communities and Local Government, shows the government has allocated £16.6 million less to the city region than was promised.

This equates to a 28 per cent reduction, with some areas like Knowsley being hardest hit with a 39 per cent shortfall from its first allocation.

This is the fifth highest cut in the whole of the UK, for the borough that is the second most deprived in the country.

From both allocations, the six councils in the city regions have received £102 million.

Crucially, this is less than half of the £239 million they estimate they will need to cope with the impact of COVID-19 over the next six months.

Following the announcement, Mayor of Liverpool, Joe Anderson, tweeted that it was a “national scandal”.

The outspoken Mayor said poorest cities and towns in the UK are being “shafted”, while leafy shires less affected by COVID-19 are “showered with riches”.

And Liverpool City Region Metro Mayor Steve Rotheram said the settlement “falls way short  of what is required”.

Liverpool City Region Metro Mayor Steve Rotheram

Mr Rotheram said: “Local councils and the combined authority are on the front line in supporting our communities through this crisis and the government is already relying heavily on them to deliver essential support and services such as; providing PPE, transport, social care and keeping other essential public services running.

“But let’s not forget this pressure comes on top of a decade of austerity, during which local authorities’ budgets have been cut to the bone.

“Councils have no reserves and little or no flexibility remaining to deal with the impact and pick-up the potentially extreme financial burden.

“This proposed settlement falls way short of what is required and we are now making robust representations to urge the government to urgently reconsider the funding allocation and provide the support we really need to tackle the crisis now – and to recover from it – together.”

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The government said the new funding is part of “comprehensive package of support”, adding that it is allowing councils to defer £2.6 billion in business rates payments to central government and has brought forward £850 million in social care grants paid to councils from this month.

Downing Street said it will continue to work with councils on the “best approach” to the next financial year, including how to treat accumulated business rates growth and the approach to the 2021 to 2022 local government finance settlement.