EXCLUSIVE: No bail outs for commercial investments

By Heather Jameson | 22 May 2020

Plans to bail out councils struggling with their finances could vary between authorities - but they will not cover commercial investments, The MJ understands.

Councils that have been particularly hard hit by a loss of income – such as those with airports – could get bespoke deals to see them through the crisis, under the proposals being considered by central government. However, those authorities which have lost money due to commercial ventures are unlikely to be bailed out.

Others who face a drop in business rates and council tax are likely to share the costs with central government. Proposals for local taxes to be underwritten by the Treasury, as outlined in The MJ last week, appear to be getting some traction with the Ministry of Housing, Communities and Local Government.

President of the Society of County Treasurers, Gary Fielding, who proposed the income guarantee plan, told The MJ: ‘It is one of a number of options they are actively considering… but they need to work out how it would work in practice.

‘It feels like things are moving in the right direction.’

Since communities secretary Robert Jenrick told MPs that Government would only fund councils for expenditure relating to the duties it expressly asked them to carry out, local authorities have been asking for more details.

He has now written to the Housing, Communities and Local Government Select Committee, outlining what he intends to fund, but stating that when local authorities go beyond the Government’s list of priorities ‘it is only right that the cost of doing so is met locally’.

The letter to chair of the committee, Clive Betts, Mr Jenrick said: ‘I have been clear that councils, like all parts of the public sector, need to spend public money.’

He also claimed the department’s monitoring ‘will provide critical insight into the wider spend and income pressures councils are facing as a result of COVID-19’.

A webinar hosted by the Chartered Institute of Public Finance and Accountancy was told the Government was looking at an income guarantee scheme that would include a 'floor'. The level of the floor would be critical to the future of local authority funding.

In his letter to Mr Betts, the communities secretary has said he will fund:

  • Support for adult social care providers – including those they do not contract with
  • Children’s services
  • Public health services
  • Fire and rescue services
  • Waste collection services
  • Shielding clinically vulnerable people
  • Homelessness and rough sleeping
  • Domestic abuse
  • Supporting the NHS
  • Managing excess deaths
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