Lambeth town hall leaders warn of £44million hole in finances as government backtracks on cash support

Vital support for vulnerable residents, schools, roads, parks, libraries, business support and leisure could all be hit by massive cuts unless the government stands by its pledge to fund town hall coronavirus support, council leaders say.

Local services in Lambeth could be placed under enormous pressure if ministers break their promises to fund the response to coronavirus, local councillors have warned.

The Government has asked local government to do everything they could to tackle
coronavirus in their communities and pledged to provide “whatever funding is needed for
councils to get through this and come out the other side”.

But ministers are now back-tracking, leaving councils facing a £10bn funding gap.
New analysis of the £10bn coronavirus black hole for local authorities has shown this could
cause a 21 per cent cut across local authority budgets for 2020/21.

Lambeth council’s Labour leadership says the borough could face a £44 million shortfall this
year if the government breaks its promise of refunding local councils for doing
“whatever it takes” in tackling the coronavirus outbreak.

Nationally, if the government withholds its grants, adult social care would lose £3.5bn  and children’s social care another £2bn – plus there would be a £700m shortfall to the public health budget. In London, such a reduction in adult social care funding would see 31,274 clients losing short and long term care, at a time when pressures on old people’s homes due to lack of funding and the coronavirus pandemic are already massive.

Other key services would also be at risk of cuts if the Government fails to plug the funding
gap, including libraries, children’s centres, leisure centres, public parks, road safety, road
gritting and street lighting.

Leader of Lambeth Council, Cllr Jack Hopkins said: “Lambeth has stepped up and continues
to play its role in the unprecedented challenge that coronavirus has brought to everyone’s
daily lives.

“We have redeployed our staff to support the response effort, dispatched over 10,000 food
parcels to vulnerable residents, paid over £25m in business grants to affected businesses,
stopped evictions and enforcement action for council tax arrears, provided three months of
rent relief for over 300 businesses and Voluntary Community Sector tenants, and much
more. We will do everything we can as a local authority to help residents and businesses but
we are being stretched to the financial limit in doing so.

“At the start of this crisis, the government told us to spend what was necessary and that
they would provide “whatever funding is needed for councils to get through this and come
out the other side”. Now they are reneging on that promise and threatening to leave
Lambeth out of pocket by over £44 million.

“We’re absolutely clear – local services cannot, and will not, be made to pay the price for
this national crisis.”
Lambeth council’s submission to the government shows that additional spending on services
like food packages for vulnerable people, combined with the anticipated loss of income, is
estimates to be around £63 million.

But so far, the additional support from the government has amounted to around £19 million – with the Secretary of State last week saying that
councils should not “labour under a false impression” that all costs would be reimbursed.

Cabinet Member for Finance and Performance, Cllr Andrew Wilson said: “It would be a
betrayal for the Government to renege on their promise of financial support, forcing councils
such as Lambeth to face the prospect of cuts to services after already suffering from a
generation of austerity.

“It is these very local services that have helped sustain Lambeth residents through the last
two months of this public health crisis, services delivered by the key workers on the frontline
who have been rightly praised throughout the country since the outbreak.

“Many of these key worker heroes who are getting us through the crisis and who the public
are justly clapping their support for would face losing their jobs if the Government breaks
their funding pledge to local government.”

The Local Government Association estimates that cuts of £10 billion represent about 20% of
all council spending, and would have a devastating effect on services.

Councils could close every library, leisure centre, and children’s centre, turn off all streetlights, and lock the gates to every park, and would still be several billions of pounds short. They would have no choice
but to make cuts to social care and public health, which would be catastrophic during this
crisis.

A spokesperson for the Treasury said the Government is not commenting on speculation about future costs.

He said: “As the Chancellor has said, ‘it’s too early to speculate on these things… but what we do know is that we’re facing a time of unprecedented economic uncertainty’.

“What’s clear is that if we had not acted in the way that we did at the scale and speed that we did, the situation would be far worse.

“That’s something that the OBR and the Bank of England have both confirmed.”