Spending of the Ministry of Housing, Communities and Local Government, House of Commons - 9 July 2020

Councils have shown leadership and supported their communities during the COVID-19 pandemic. Local authorities and their essential workforce have worked hard to protect the most vulnerable within their communities, they have supported businesses and convened the voluntary sector to bring together communities, as well as continuing to deliver key services.

Key messages

  • Local government’s delivery of important public services during this critical time highlights the value of place-based leadership. Our most recent polling found that 75 per cent of residents are satisfied with the way their council runs things and 73 per cent trust councils most to make decisions about how services are provided in their area. It is essential that research such as this informs national policy-making in the future.
  • Our analysis indicates that councils face an estimated financial challenge of nearly £11 billion in 2020/21 due to COVID-19. Of this, the Government initially met £3.2 billion with welcome grant funding and Clinical Commissioning Groups (CCGs) have contributed nearly £300 million from their budgets. The announcement of a further £500 million of extra funding and an arrangement to partially compensate councils for lost income from sales, fees and charges on 2 July is also helpful.  However, in the context of the financial challenge councils still face, substantial additional funding will be needed, and we await further details on how the new grant will be distributed.
  • The loss of business rates and council tax income accounts for more than half of all income losses for councils. However, we are pleased the Government has committed to find a solution to the loss of local taxes in the 2020 Spending Review.  In order to have the certainty they need to set budgets for next year, councils still need urgent clarity on the irrecoverable losses the Government has positively said it will pick up. This will need to cover all losses from local taxes.
  • Looking beyond the COVID-19 crisis and this financial year, councils need greater certainty in the long-term. Council services were stretched before the pandemic, and the crisis has only exacerbated local government’s funding shortfall. The 2020 Spending Review and Autumn Budget will be key opportunities for sustainable funding solutions and movement towards greater service and fiscal devolution, allowing councils to deliver for local communities.
  • Our Rethinking Local conference paper highlights how the 2020 Spending Review, Budget and English Devolution White Paper will be key opportunities to put in place sustainable funding solutions and move towards greater fiscal devolution, to allow councils to deliver for their local communities.

Download the full briefing
Estimates day debate on the spending of the Ministry of Housing, Communities and Local Government,  House of Commons