Covid-19: Funding for Local Authorities

Navendu Mishra Excerpts

Tuesday 24th November 2020 Westminster Hall

[Navendu Mishra (Stockport) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) for securing this important debate.

As far back as May, I wrote to the Secretary of State for Housing, Communities and Local Government asking for a cast-iron guarantee that the Government would deliver on their promise to cover the costs of local authorities’ response to the pandemic. At the time, Stockport Metropolitan Borough Council in my constituency was facing a shortfall of £41 million, like other councils, and that shortfall has now increased considerably. Six months on, we are still awaiting an assurance from the Government, while local authorities continue to be pushed into the red as they struggle to stump up funds to safeguard the lives of their citizens during the latest wave. Faced with economic ruin, the council was pushed into the dark, as we saw most recently when the London Borough of Croydon was forced to file for bankruptcy after being unable to address a £66 million black hole.

Our councils continue to do the job of ensuring that everyone receives the support they need during this incredibly troubling period. I have enormous respect for them and am incredibly grateful for the work that they have continued to do in challenging circumstances. The deputy leader of my council in Stockport, Councillor Tom McGee, is a fine public servant and I thank him for ensuring that our local public office holders are updated at every stage of the pandemic and are aware of the challenges faced by our local administration.

Nobody expects the Government to have foreseen a global pandemic, but it is clear that a decade of austerity—an ideological choice, not an economic necessity—has ravaged local authority finances and left them weakened, forcing councils to delve into their reserves to redress the central Government shortfall. To put that in context, Stockport council went into the crisis with over £100 million already slashed from the town hall budget since 2010. The council has now been forced to step in to compensate for the Government’s insufficient funding, and local authority budgets are stretched even further. During the first wave alone, the funding black hole for Stockport council was £25 million. Failure to underwrite council expenditure will have dire consequences for my council and leave it with little alternative but to consider dramatic measures such as issuing section 114 notices to curtail all but essential spending, leading to wholesale reductions in services for all those living and working in Stockport.

The Government must urgently intervene to ensure that all councils are in a position to protect their citizens and prevent other services from going to the wall, including libraries, parks, museums and leisure services. Adult social care is one area that cannot be overlooked, and it is already under enormous pressure, as was mentioned by my hon. Friend the Member for Bethnal Green and Bow. The Government need to resolve the funding crisis in the adult social care sector. The Local Government Association recently estimated that social care services face an additional cost of over £6.5 billion to cover costs. The main three areas are PPE, increased staff costs, and increased cleaning and overheads.

In addition to the vast expenditure that local authorities are forced to cover during this period, many have seen their incomes cut dramatically. Every council in Greater Manchester, for example, has been hit by the drop in the dividends from Manchester airport on which it relies. For Stockport council, that means that more than £6 million has been lost, placing further strain on services and jobs—and that is even before we factor in the significant number of jobs lost in the aviation sector more widely, where many of my constituents work in the UK’s third-largest airport.