Boroughs seek certainty on future Covid funding

  • Boroughs faced spending pressures and lost income costing them £600 million in first half of 2021-22
  • Even after July 19th, boroughs expect to continue supporting the public health response to the pandemic
  • Some grants and compensation schemes have already ended and others taper off over the coming months

London Councils is calling on Government to provide certainty on funding for London boroughs for the rest of this year as they continue to support Londoners and businesses through the Covid-19 pandemic.

The impact of the pandemic is casting a long shadow, with boroughs anticipating spending pressures and lost income of more than £600 million for the first half of 2021-22, and growing uncertainty over funding with a number of key funding and compensation streams ending last month.

As Covid-19 continues to affect the capital, boroughs will need to spend money to support the public health response via the vaccination programme, responding to new variants of concern, delivering local contract tracing and supporting people to self-isolate when needed.

Recent London Councils research projected that unemployment in London could peak at 10 per cent this year, which will increase the number of people accessing local welfare services and lead to a rise in homelessness as some Londoners find themselves unable to afford their rent or mortgage.

The effects of Long Covid are increasing demand for, and the complexity of, adult social care needs, and both children and adult social care are seeing rising demand for services.

The ending of the furlough scheme in September, the tapering of business rates reliefs and ending of business support grants will mean that lost income from business rates, fees and charges, commercial and housing rents is unlikely to return to pre-pandemic levels for some time.

With no compensation scheme for council tax or business rates losses this year, and the fees and charges scheme ending in June, this is a growing concern.

London Councils is asking the Government to confirm, as soon as possible, the funding envelope for London boroughs to continue to address the pandemic for the remainder of the year, including:

  • extending the Sales Fees & Charges scheme for the remainder of the year;
  • implementing a compensation scheme for tax losses in 2021-22;
  • ensuring funding for ongoing spending pressures relating to outbreak management including new variants of concern; and
  • extending the Test and Trace Support Scheme to help incentivise self-isolation beyond June.

Cllr Georgia Gould, Chair of London Councils, said:

“London boroughs have huge responsibilities and the stakes could not be higher. We are supporting the Covid-19 vaccine rollout that is vital to protecting our residents from the virus, delivering grants to businesses, caring for Londoners with complex social care needs and finding homes for rough sleepers.

“The Covid-19 pandemic continues to intensify demand for vital services and deepen inequality in our city, yet several important funding schemes stopped at the end of the month and our sources of income are unlikely to bounce back quickly.

“That’s why we’re calling on Government to provide certainty by confirming the funding and compensation councils need to continue delivering key services to residents this year.

“With greater clarity over the funding support on offer, which should include extensions of the Test & Trace Self-Isolation Support Scheme and Sales, Fees and Charges Compensation Scheme, we can get on with the crucial work of supporting our communities, creating jobs and nurturing the recovery we all want to see."

Looking ahead, London Councils is expecting that the impact of the pandemic will continue to be felt across the city, putting a disproportionate strain on the most vulnerable, and this will affect councils’ spending and income levels beyond the 2021-22 financial year.

London Councils will be urging Government to ensure the Spending Review, due in the autumn, provides local authorities not only with funding certainty over the next three years, but a sustainable settlement that addresses the ongoing pressures driven by the pandemic and the existing underlying structural pressures London’s councils were facing after a decade of funding reductions and rising demand for services.


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