Councils warn of £10billion cash black hole as Jenrick hands out £500m

Councils warn of £10billion cash black hole as Jenrick hands out £500m

Councils warn of £10billion cash black hole as Robert Jenrick pumps an extra £500million into struggling English local authorities – less than £1.5million each – amid bankruptcy fears

  • Local Government Secretary said cash would go towards covering lost income 
  • It is part of £4.3billion package of support put in place by the Government so far
  • Councils have warned they face a funding black hole of up to £10billion
  • An already dire financial situation had made worse by coronavirus pandemic

Robert Jenrick sparked a row with local government this morning after announcing plans to pump an additional £500million into council coffers today.

The Communities Secretary said the cash would go towards covering lost income during the coronavirus lockdown, which has seen mothballed firms given business rate holidays and forced other cuts to income.

It is part of a £4.3billion package of support put in place by the Government – as councils warn they face a funding black hole of up to £10billion, with an already dire financial situation made worse by the coronavirus pandemic.

The cash, which equates to less than £1.5million for each of the 343 local authorities in England – with extra money for those in Scotland and Wales. 

It comes after Tory-run local authorities last week warned the Government they face possible bankruptcy if a second wave of coronavirus forces the UK into a new lockdown.

Nick Forbes, the Labour leader of Newcastle City Council, addressed Mr Jenrick and Boris Johnson on Twitter, writing: ‘I’m sorry, this £500million goes nowhere near filling the £10billion funding gap councils face this financial year. 

The Communities Secretary said the cash would go towards covering lost income during the coronavirus lockdown, which has seen mothballed firms given business rate holidays

‘We’ve been giving you the benefit of the doubt up until now, but our patience is wearing very thin.’

Mr Jenrick also announced this morning that the Government would help underwrite loses. Where the council is losing more than 5 per cent of ints income from ‘sales, fees and charges’, the Government will cover 75p of every pound lost. 

Mr  Jenrick MP said: “Councils are playing a huge part in supporting their communities during this pandemic.

“From supporting the most vulnerable and keeping vital services running to operating local track and trace, council workers have been at the forefront of this great national effort and are the unsung heroes of this pandemic.

“Today I am providing a further package of support that takes our support for councils during this pandemic to £4.3 billion to help meet the immediate pressures councils are facing.

“I know that the loss of revenue from car parks and leisure centres has created huge difficulties, so I am introducing a new scheme to help cover these losses.”

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