Published on Local Government Chronicle BY SARAH CALKIN

Councils are still facing a Covid-driven funding gap of nearly £2.3bn in 2020-21, the Local Government Association has warned, despite recent additional funding for being made available to places facing the highest tiers of restrictions.

During a session at the LGA’s annual finance conference this morning, deputy chief executive Sarah Pickup said councils’ latest returns on the financial impact of Covid 19 showed they were forecasting full-year pressures of £9.7bn. However, they will have received funding of £7.4bn from emergency Covid funding, money via clinical commissioning groups to support social care and an estimated £1bn to cover lost sales, fees and charges income.

Ms Pickup said much of the discrepancy was due to the government choosing not to compensate councils for all lost commercial income and the LGA continued to lobby the government to fully fund all Covid related pressures this year and next. This includes the cost of running Covid secure elections in May which Ms Pickup said officials had indicated was expected to be met from the £1.55bn Covid funding for 2021-22 that was announced as part of the provisional local government finance settlement last month.

Following the publication of the settlement, Ms Pickup said the LGA was also lobbying the government to allow districts to increase council tax by more than the maximum £5 currently proposed in 2021-22 and to consider wider reforms to council tax. Even if the government did not wish to embark on wholesale reform, this could include adding additional property bands or reforming the single person discount, she said.

And while the LGA welcomed the freedom to levy a 3% adult social care precept on council tax next year “in the sense that it’s better to have it than not have it”, members were clear that “we don’t think raising funding for adult social care through council tax is a long-term solution” .She said although the LGA was not expecting the Budget in March to include long-term proposals for social care they were hoping it would “pave the way for reform”.

In its response to the provisional settlement the LGA  is also calling for the public health grant to be increased and published as soon as possible, the resumption of the fair funding review and for the government to work with the sector on reform of the new homes bonus for 2022-23.

However, Ms Pickup said the LGA did not want to see further rollout of business rates retention given the uncertainty around the future of the tax.

“We need to be less dependent on business rates. There has been so many reliefs and it doesn’t match our spending trajectories,” she said.

Chair of the LGA’s resources board Richard Watts (Lab) told the session he had been disappointed that communities secretary Robert Jenrick had not given wholehearted support to councils increasing council tax next year, given assumptions they would do so accounted for 87% of the 4.5% increase in spending power for 2021-22.Responding, Ms Pickup said: “I think it’s a bit much… I don’t think anyone [in the government] has said they won’t stand behind us but they shouldn’t even be equivocal about it.”

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