Rochdale Council warns it faces a huge shortfall should government go back on coronavirus funding pledge

Rochdale is the latest council to warn it faces a huge shortfall should the government go back on its promise to fully reimburse councils for the cost of Covid-19.

The authority says it would be left with a £26m hole in its finances should no further help be forthcoming from the government.

It comes after Stockport council recently sounded the alarm over a possible £25m bill for its coronavirus response, while Salford council leader Paul Dennett wrote to the Prime Minister over fears his authority would be left £33m out of pocket.

The government has so far confirmed £3.2bn of support for local authorities – of which Rochdale council has been allocated £13.6m towards its estimated £40m bill.

In March, local authorities were reassured by Chancellor Rishi Sunak’s promise to do ‘whatever it takes to get the nation through’ while communities secretary Robert Jenrick told councils the government would be ‘ensuring money flows to you’.

But there has been alarm in local government after ministers’ language shifted from ‘whatever it takes’ to ‘sharing the burden’ – with a conference call Mr Jenrick held with local leaders sparking particular concern.

He also recently warned that the government would not pick up the bill for every coronavirus-related cost incurred by councils.

And the communities secretary sparked fury in some quarters on Wednesday (6 May) after claiming councils were receiving more money than they said they needed to cover ‘the covid-related costs they are bearing’.

His statement was clearly at odds with Rochdale’s experience – with the town hall so far receiving £13.6m towards the projected £40m cost of dealing with the coronavirus pandemic.

Rochdale council leader Allen Brett said: “We’re doing what it takes to support our residents and businesses, but there is no doubt we are taking a severe financial hit, due to lost savings, additional costs to services and loss of income.

“Clearly local government is facing unprecedented challenges and although we have been promised government money to help, this still leaves a huge gap.

“I am pleased to see how magnificently our staff are stepping up and we have so many people doing a wonderful job, but the reality is that a decade of public spending cuts have left a huge hole in council finances and we could face more problems if there are future spikes.”

Councils may take some comfort from the fact Mr Jenrick acknowledged their drop in income from car parks, leisure centres and other sources was a ‘particular challenge’ the government was ‘focused on’.

But Councillor Brett said: “We cannot overlook the increased risk and financial pressures this places on our authority. The government need to provide us with the resources we need to continue this fight and assist in our national recovery.”

“Without a commitment that all costs of dealing with the pandemic are met, the funding problems that have blighted core services will be compounded – not least by the further reductions in spending we will be forced to make to cover the gap between the funding received to date and the actual cost to our authority.

“Going forward, more sustainable funding for councils is crucial.”

Greater Manchester councils are expecting costs – and particularly loss of income – to come in at around £541m next April – far exceeding their share of the £3.2bn of support announced so far.

Nick Statham, Local Democracy Reporter