Boroughs fear “cliff-edge ending to support” in Budget

  • London Councils highlights key asks for business, workers and local government ahead of tomorrow's Budget
  • There has been a 157% increase in unemployment claims in London between March 2020 and January 2021
  • Financial impact of the virus on London boroughs will be felt well into 2021-22 and beyond

The upcoming Budget must support London’s recovery from the Covid-19 pandemic by giving local government the funding and powers to ignite the economy and boost jobs in an inclusive way, according to membership group London Councils.

In its submission to the Treasury ahead of the Budget on Wednesday 3rd March, London Councils has outlined the challenges facing London as it continues to respond to a long-running public health crisis.

London has experienced the largest number of job losses of any part of the UK – there has been a 157% increase in unemployment claims between March 2020 and January 2021, reaching a total of 485,000 claims in London. Unemployment on this scale risks pushing significant numbers of families and households in London into poverty.

London’s businesses and workers will continue to need support in the months ahead as the country moves through Government’s Roadmap of easing restrictions. London’s hospitality sector has seen over 70% of the workforce using the coronavirus job retention scheme and three quarters of London’s arts, entertainment and recreational businesses are reporting a decrease in turnover.

London Councils’ Budget asks for business and workers include:

  • Extending targeted business rates reliefs for the retail, hospitality and leisure sectors into 2021-22;
  • An extension of the coronavirus job retention scheme and support for the self-employed;
  • Releasing further discretionary grant funding for businesses to enable councils to target support locally;
  • Increasing the Test & Trace self isolation support payment to enable more people in low paid and insecure employment to stay at home if they test positive for the virus; and
  • Supporting longer term job creation and productivity by devolving skills and employment and the Apprenticeship Levy.

From supporting local high streets to follow pandemic restrictions to finding safe accommodation for rough sleepers and running local testing centres, London boroughs have been at the forefront of the response to Covid-19, but they have also been deeply affected by it. Councils will also be at the forefront of supporting families and communities hit hardest by job and income losses over the coming year.

London Councils estimates that total financial impact of the virus on London boroughs this year will be £2.2 billion, half of which is additional spending and half of which is lost income. The emergency funding government has provided will fall £300-400 million short of this. With much of this impact not hitting budgets until the next financial year, and additional spending and income losses likely to continue, the financial impact of the virus will be felt well into 2021-22 and beyond.

London Councils’ Budget asks to support councils’ finances include:

  • Providing further emergency funding before April if needed;
  • Expanding the 75% Sales, Fees & Charges and tax loss schemes so that they cover all losses; 
  • Extending both schemes to cover the whole of 2021-22;
  • Providing compensation for lost Housing Revenue Account, commercial and other income (worth nearly £180 million in London); and
  • Confirm the timetables for the Spending Review, the Fair Funding Review and reforms to Business Rates retention – which should pave the way for meaningful long-term fiscal reform.

Cllr Georgia Gould, Chair of London Councils, said:

“The Budget must recognise that businesses, workers and local councils will be under enormous pressure for many months as pandemic restrictions are eased and as we seek to recover. A cliff-edge ending to support would be catastrophic for businesses, workers and families across the city.

“London typically provides a net surplus of £39 billion to the Treasury. Targeted investment to support businesses and workers in the capital and across the country, supported by local leaders, is the surest route to a sustainable and inclusive economic recovery, and the best way to avoid real harm to Londoners just looking to get back on their feet after the challenges of the last year.

“London boroughs are at the heart of their communities and have played a pivotal role in responding to Covid-19 – protecting the most vulnerable, delivering new services and working closely with Government to communicate advice and information to our residents. We need financial certainty and stability to continue delivering effective services, to keep people safe and to help businesses through the unpredictable months ahead.”



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