Tristan Chatfield, Cabinet Member for Finance and Resources, writes:
As a result of coronavirus all local councils across the UK are under extraordinary financial pressure. Birmingham is no exception and whilst our Labour Council have taken steps to significantly improve our financial position over the last couple of years we are still dealing with the impact of a decade of Tory austerity.
We estimate currently that the impact of coronavirus both in additional costs and lost income will be around £280 million. So far Birmingham has received just £70 million in additional funding from government. That leaves a huge gap that we will struggle to fill without spending our reserves or inflicting yet more catastrophic Conservative cuts on the people of this city.
Initial soundings from the government were positive with Robert Jenrick, the Secretary of State for Housing, Communities and Local Government, committing to supporting councils regardless of cost. Unfortunately, there are now some very different noises coming from Whitehall suggesting that loss of income and economic recovery will not be funded. This puts many councils close to the cliff edge.
For years successive Tory governments have promoted commercialisation and income generation as the route out of austerity for councils. Indeed, many smaller district councils in the Tory shires are almost entirely dependent on this source of funding.
Birmingham Council is no exception. The history of the city council began as a public supplier of utilities like gas and water. Our urban revival was sparked in the 1990s by the development of commercial ventures like the NIA, ICC and NEC. Since Labour came to power in Birmingham eight years ago, we have continued to benefit from successful projects like Birmingham Airport, The Paradise redevelopment and Grand Central.
We also derive income from car parking charges, garden waste collection and planning applications. All of these are under huge strain as a result of the lockdown. Every department of the council – from our parks and libraries to regeneration and museums – rely to some extent upon income derived from commercial activity. As I have said, this approach was endorsed and encouraged by this Tory government. But this dependency now leaves us and many other councils facing a huge loss of income, which for Birmingham was £15million for the month of April alone.
We also know from past experience that during recessions, one of which we are almost certainly about to plummet into, that some businesses and people will simply no longer be able to pay their council tax and business rates. We estimate that this alone will cost us somewhere in the region of £64 million over the next year.
Furthermore, during the last recession the City Council granted and loaned money to companies to keep our economy afloat when bank lending dried up. Our ability to do this now will be very limited indeed.
We need the government to make good on its earlier promises. To go back on their word would risk disaster for councils up and down the land. If government fails to support councils in their time of need then not only will some no longer be able to function many others will face years of crippling service cuts leading to deprivation and failing services.
My ask of government is threefold:
1. Give us cash to cover immediate loss of income.
2. Allow access to short term cheap borrowing.
3. Finally, invest heavily in capital programmes to restart the economy.