Council pleads with government to honour its Covid-19 funding promise

Mulberry place town hall

Tower Hamlets Town Hall

The high and ongoing cost of dealing with Covid-19, as well as future uncertainty around local government funding, is placing a heavy financial burden on Tower Hamlets Council. This has led to John Biggs, Mayor of Tower Hamlets, issuing a stark warning that unless the government sticks to its promise to do “whatever it takes” to support local councils, there will be some very tough funding decisions to be faced.

The serious financial situation was laid out at the Cabinet meeting held virtually on Wednesday 29 July. Figures from the first four full months of lockdown show that due to increased essential spending and loss of income, the council has had to spend £60 million more and with the government only committing so far to provide £30m, there is a financial black hole of £30m.

When looking to future years the financial situation becomes bleaker still. In February this year, the council agreed its budget up to 2020 – 2023, which included savings of £8.6 million. However, as a result of the growing Covid-19 financial black hole, extra budget gaps mean that through its medium term financial strategy, the council needs to find an extra £60m by the end of the financial year 2023 - 24.

John Biggs, Mayor of Tower Hamlets said: “As a council we have already faced a decade of government austerity. The stark reality is that on top of that we now face both increased costs and a reduction in income due to Covid-19 which has put a heavy burden on public services and finances that will last for years to come.

“We welcomed the government’s pledge to do ‘whatever it takes’ to ensure that councils can meet the urgent needs faced in their communities. However, the truth is that the financial support received so far, falls well short of what we have already had to spend to keep our community safe. On top of this, if the government fails to deliver a genuinely fair funding package, the local services our community relies on will be at risk.”

Since 2010 and the start of government austerity cuts to local authorities, the council has worked hard to innovate and successfully save £190m, while safeguarding important frontline services.

However, due to the pandemic, the council faces major falls in future income from council tax, business rates, and money that comes in from fees and charges. In addition, the delayed government spending review and future changes to how councils are funded, (which could see councils like Tower Hamlets lose out), are all adding to a bleak and financially uncertainty future for the borough.

The ongoing impact of the pandemic across many key areas of concern mean that the council will need to find extra resources in the months and years ahead. This rise in demand requires extra support for vulnerable children, families and adults. It is seen across many resource demanding areas including physical and mental health, safeguarding, social care, homelessness, unemployment, domestic abuse, antisocial behaviour, as well as increased levels of financial hardship and poverty that are compounding existing inequalities.

The serious concern about the disproportionate health impact of Covid-19 on people from Black, Asian and minority ethnic backgrounds has been felt locally and is an example of the interconnected nature of the ongoing effects of the pandemic in the borough. These are currently being investigated by the council and local health partners.

The Cabinet meeting also heard about some of the positive achievements during the pandemic.

Councillor Candida Ronald, Cabinet Member for Resources and the Voluntary Sector said: “There’s no doubt that Covid-19 has financially impacted on our residents and local community organisations. However as a community we can take pride from the positive way in which we have come together, especially in support of our most vulnerable residents.

“I’m pleased that as a council we have stepped in with a £120,000 Covid-19 Community Fund to support organisations that will be vital in continuing to support residents in the months ahead.”

The “Everyone In” scheme to help rough sleepers off the streets has made it easier for them to get health and substance misuse support. Tower Hamlets has the highest estimated rates of crack and opiate use in London, so this is a significant achievement and provides an opportunity for lasting change subject to the financial support continuing.

As car and public transport use dropped during the pandemic – with people working from home or furloughed – air quality improved in Tower Hamlets. Across London, nitrogen oxide dropped by 27 per cent. Although car and public transport use has started to increase, the council is working on a number of schemes such as Liveable Streets and the London-wide Streetspace programme to encourage more walking, cycling and other safer and healthier ways for people to get around the borough.

Following the Cabinet meeting, further detailed financial planning and cost saving work will take place over the summer with initial proposals to come back to Cabinet in September. A consultation with residents, businesses and local organisations will take place later in the year.

This will be reflected in the council’s medium term financial strategy, which will include: adjustments following the government’s delayed spending review; updates on the government’s fair funding plans; fees and charges; and rates for council tax and business rates. It will be agreed with the final budget setting at Full Council by March 2021. The council’s strategic plan will be updated to reflect the pressures faced by Covid-19 and related priorities.

Posted on Wednesday 5th August 2020