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Struggling councils face £10bn black hole, Starmer warns

by Ace Damon
Struggling councils face £10bn black hole, Starmer warns

Councils face a “perfect storm” as a result of the coronavirus crisis and government inaction that could decimate local services, Labour warns.

Leader Sir Keir Starmer says local authorities will have a £10 billion “black hole” in their finances unless ministers intervene to cover the deficit.

Many councils have struggled with pressure on budgets caused by blocking measures cutting their sources of income, while the demand for support for the elderly, disabled, homeless and other vulnerable groups is high, and should be paid while maintaining normal services – such as garbage collections – running.

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Charities said more than £500 million of council tax was not paid during the blockade

The communities secretary promised at the outset that he would do “whatever is necessary to support the councils in their response to the coronavirus.”

Around £1.6billion was initially promised to help them stay afloat and councils were allowed to defer payments of business rates to the central government.

But councillor Richard Watts, chairman of the Local Government Association ‘s (LGA) resource board, warned just over a week ago that “more resources and financial flexibilities are now needed to help councils.”

He estimated that the deficit could reach at least another £6 billion this year.

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This money is “vital for councils to avoid taking action, such as year-on-year cuts in local services, to address funding shortfalls and meet the legal duty to balance their budgets,” he added.

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Sir Keir will try to win over the LGA with a virtual speech at its annual conference on Wednesday with the promise of “building a new relationship between national government and local government.”

He is also expected to reaffirm his commitment to replace the House of Lords with a second elected chamber representing “the nations and regions” of the United Kingdom.

“We would give the local government a much greater opinion on investment and services, not through plans drawn up by someone in an office in Whitehall, but those created and rooted in communities, so that they really serve the people,” he will promise.

“We would put local government, its power and its innovation directly in the heart of Westminster, replacing the House of Lords with a second democratic chamber representing the nations and regions of the United Kingdom.”

Sir Keir Starmer
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Sir Keir wants to replace the House of Lords with a second elected chamber

The government tried to support the emaving councils by promising £105 million to help the homeless receive temporary accommodation during the pandemic and prevent them from returning to the streets.

And a comprehensive plan to address the financial challenges facing councils this financial year has been promised as the total number of COVID-19 cases and deaths continues to fall in the UK.

Charities, including Citizens Advice, warned last week that more than £500 million of council tax was not paid during the coronavirus outbreak.

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