Councils should have their debts totalling £84bn nationwide written off to help them deal with the coronavirus pandemic.
That was the message of a letter sent to the government by Wirral’s four MPs today.
The letter, written by Birkenhead MP Mick Whitley and signed by Alison McGovern, Angela Eagle and Margaret Greenwood, pointed to the heavily criticised cut in support for many local authorities in the second tranche of government funding.
In the first wave of funding, Wirral was given £11.8m, but this was cut to £8.9m in the second wave.
This is because the money has been handed out according to the population of an area, rather than its need based on the amount of deprivation and poverty it faces.
The settlement has led to Liverpool Mayor Joe Anderson suggesting the city could go bankrupt and fears that Halton Council could be heading the same way.
Mick Whitley, MP for Birkenhead
The letter made three key demands.
Councils should be reimbursed for additional expenditure they have incurred supporting people through the pandemic.
The £84bn council’s across the country owe in debt should be written off.
There should be a ‘realistic increase’ in central government funding to councils, based on economic indices of poverty, deprivation and need, not just on population.
Wirral, the MPs pointed out, is one of the most vulnerable areas to coronavirus in the country.
Data out last week suggested it was the third most ‘at risk’ area from Covid-19, behind Middlesbrough and Walsall.
Commenting on this, the letter read: “Quite literally our communities have been ravaged, our hospitals stretched to the limit and our care homes scenes of devastating disease and death.”
The four Labour MPs came together to praise Wirral Council, saying it was doing an “amazing job” in making sure no-one suffers hunger, carers are paid properly, and essential services were maintained.
Attacking the government, the letter added: “On 18 April 2020 you stated that councils ‘would have the resources they need to meet this challenge.’ Unfortunately, your deeds do not appear to match your soundbites.”
Detailing the vast scale of Wirral Council’s money problems, Mr Whitley said the authority is likely to lose half of the £32m it usually generates in income annually.
The council also needed to make around £35m in savings to balance its budget at the start of the financial year before Covid-19 struck, but just £8m of these savings are likely to be made, leaving the council another £27m out of pocket.
This is due to multiple factors, including the shock to the social care market coronavirus has caused, preventing the council from achieving the savings it desired and the loss of commercial opportunities for income due to the problems lockdown has created for businesses.
Wirral Council has also not been able to progress with modernisation plans, which were due to save it £5m this year.
Further losses cannot yet be quantified, including the loss of income from Council Tax and Business Rates.
But already the council has seen 1,500 direct debit cancellations, money that will be hard to recover given the financial nightmare many individuals and businesses are facing.
Adding the many different factors together, the letter concludes that the council faces a staggering £45m in financial pressures.
That is more than the £35m figure Wirral Council gave last week, because the figure is a “moving target” and lost income from Business Rates and Council Tax was not included in that estimate.
Commenting on the problems facing Wirral Council, its leader Labour councillor Pat Hackett, said: “The latest ONS figures have made the direct link between areas of greater poverty and increased mortality from the coronavirus – and very sadly show Wirral is one of the areas of the country which has been hit by this terrible connection.
“The ONS figures show Wirral has seen between March 1 and April 17, 2020 deaths of 48 per 100,000, a desperately sad reflection of the fact that parts of our borough are among the most deprived and have been subject to a decade of austerity which may well have impacted on their resilience to this virus compared to other areas.”
“For this reason it is of serious concern that the Government is not allocating finance according to need but just on a simplistic basis of how many people live in an area – clearly some parts of the country need more help than others and should receive it.”
Cllr Hackett made a plea to the government to change its approach.
He added: “Local government is a key part of the frontline in tackling the COVID-19 pandemic in this country, from our work with the care sector, supporting the NHS, schools and providing humanitarian services to vulnerable people in our communities.
“I therefore call on the secretary of state for MHCLG Robert Jenrick to urgently review the funding of local government to ensure that Wirral Council is properly and fairly recompensed.”