Birmingham tops latest round of council Covid-19 allocations

16 Jul 20
Birmingham City Council has received the biggest allocation from the government’s latest £500m pot to support councils with spending related to Covid-19.

The government today announced individual allocations from the third tranche of funding, which take the total central government support for councils to £4.3bn.

Birmingham received £14m, which takes its total compensation to £84.2m – the highest cumulative award to any council.

However, the latest allocation only makes up a small proportion of the £74.4m budget shortfall identified in a report to a Birmingham cabinet meeting next week, prepared before the latest announcement.

Announcing the allocations, local government secretary Robert Jenrick said: “The funding will help councils in England continue to deliver crucial frontline services, support those most in need and meet new spending pressures so they can deliver for residents.”

Jenrick said the funding would be distributed based on population and levels of deprivation, and how the costs of delivery of services varies across the country.

The Ministry for Housing, Communities and Local Government also announced that £6m from the latest funding round will be directed to the Department for Education to assist a small number of local authorities facing issues with unaccompanied asylum seeking children.

The £500m third tranche of funding was announced at the beginning of July, alongside a scheme to compensate councils for income losses from sales, fees and charges.

Authorities will be expected to absorb the initial 5% of losses compared to planned income, after which the government will compensate councils for 75p out of every pound of losses.

Responding to the allocation announcement, Sir Stephen Houghton, chairman of the Special Interest Group of Municipal Authorities, said: “While we welcome that the formula takes account of deprivation, the size of the pot is insufficient to compensate councils for Covid pressures and more funding will be required to stop councils facing significant cuts or issuing section 114 notices.”

Carl Les, County Councils Network spokesperson for finance, said that across the three tranches of funding, counties have received 36% of the total, with the last two announcements being “slightly below what we hoped for”. 

He said it was is crucial the government brings forward a scheme to compensate councils for lost council tax and business rate income, “which pose the largest financial risk to councils over the coming period”.

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