Extra £500m for councils to tackle coronavirus fallout

Communities Secretary Robert Jenrick said the funding, which is not ring-fenced, would bring Covid-19 support to local authorities to £4.3bn, and it comes after the financial black hole faced by councils due to the pandemic had become clear in recent weeks.

One report, from the County Council Network, found all 39 of the county and unitary authorities included in their study could use up their available reserves in 2021/22 to cover a funding shortfall of £2.5bn.

Another, by thinktank the Centre for Progressive Policy, showed eight out of 10 councils were looking at effective bankruptcy.

Mr Jenrick said the moves will help reimburse local authorities for lost income and allow council and business rates tax deficits to be repaid over three years instead of one.

The Government said it understood the “unprecedented impact” the pandemic has had on councils’ income from car parks, museums and other cultural assets, and will compensate them.

Mr Jenrick said that to “boost cash flow” any loss of income above five per cent of the planned take from sales, fees and charges will be compensated at a rate of 75p in every pound.

He said: “Councils are playing a huge part in supporting their communities during this pandemic.

“From supporting the most vulnerable and keeping vital services running to operating local track and trace, council workers have been at the forefront of this great national effort and are the unsung heroes of this pandemic.

“Today I am providing a further package of support that takes our support for councils during this pandemic to £4.3bn to help meet the immediate pressures councils are facing.

“I know that the loss of revenue from car parks and leisure centres has created huge difficulties, so I am introducing a new scheme to help cover these losses.”