Struggling councils face £10bn black hole, Keir Starmer warns

Councils face a “perfect storm” as a result of the coronavirus crisis and government inaction which could decimate local services, Labour is warning.

Leader Sir Keir Starmer says local authorities will have a £10bn “black hole” in their finances unless ministers step in to plug the shortfall.

Many councils have struggled with the pressure on budgets caused by lockdown measures cutting off their income sources while demand for support for the elderly, disabled, homeless, and other vulnerable groups is high, and must be paid for while keeping normal services – such as bin collections – running.

The communities secretary promised at the outset that he would “do whatever is necessary to support councils in their response to coronavirus”.

Around £1.6bn was initially pledged to help them stay afloat and councils have been allowed to postpone business rates payments to central government.

But councillor Richard Watts, chair of the Local Government Association’s (LGA) resources board, warned just over a week ago that “further funding and financial flexibilities are now needed to help councils”.

He estimated the shortfall could reach at least a further £6bn this year.

That money is “vital if councils are to avoid taking measures, such as in-year cuts to local services, to cope with funding shortfalls and meet the legal duty to balance their budgets”, he added.

Sir Keir will try to win over the LGA with a virtual speech to their annual conference on Wednesday with a promise to “build a new relationship between national and local government”.

He is also expected to reaffirm his commitment to replacing the House of Lords with an elected second chamber representing “the nations and regions” of the UK.

“We would give local government a much bigger say over investment and services, not through plans devised by someone in an office on Whitehall, but ones created and rooted in communities, so that they truly serve the people,” he will pledge.

“We would put local government, its power and its innovation, straight at the heart of Westminster by replacing the House of Lords with a democratic second chamber representing the nations and regions of the UK.”

The government has tried to support struggling councils by promising £105m to help homeless people given temporary accommodation during the pandemic and stop them returning to the streets.

And a comprehensive plan to address the overarching financial challenges councils face this financial year has been promised as the number of overall number of COVID-19 cases and deaths continues to fall in the UK.

Charities including Citizens Advice cautioned last week that more than £500m of council tax has gone unpaid during the coronavirus outbreak.

(c) Sky News 2020: Struggling councils face £10bn black hole, Keir Starmer warns