MPs join call for £82 billion debt cancellation for crisis-struck local authorities

Claudia Webbe, a signatory of our statement, has gained the support of 27 other MPs, who have written to Chancellor Rishi Sunak, calling on him to cancel local authority debt. Here is her press release.

Claudia Webbe, Member of Parliament for Leicester East, with the support of cross party MPs has written to the Chancellor calling on the government to address the Local Authority financial crisis by freeing up £4.5 billion in additional income per year.

The letter highlights the fact that a high number of council leaders have warned that essential services are being stopped or scaled back as they focus on dealing with the Covid-19 pandemic. The National Audit Office reported a 49.1% real terms reduction in government funding of local authorities between 2010/11 and 2017/18, and the coronavirus crisis has placed councils under further strain.

Councils such as Nottingham County Council are paying £37 million per annum to service the debt they owe to the Public Works Loan Board, whilst others like Leicester City Council and Manchester City Council are paying as much as £20 and £21 million per annum respectively.

At a time of national and international crisis as a result of the Coronavirus pandemic, the letter argues, it is clear that such sums could be better spent meeting the immediate needs of our communities – especially vulnerable and at-risk individuals.

The MPs call on the Chancellor to cancel the £82 billion local authority debt held by the Public Works Loan Boards. Rather than adding to the debt burden, as the government’s existing plan does, cancellation would mean around £4.5 billion extra a year for local authorities to fund critical services.

Claudia Webbe MP said:

“The COVID-19 pandemic risks tearing up our social fabric, which was already stretched to breaking point after a decade of cruel austerity.

“Recent headlines show the perilous condition of our Local Authorities. After years of brutal budget cuts, councils fear they will have to make further savings of 20% and face a social care funding shortfall of £3.5bn due to coronavirus.

“It is not good enough for the government to simply add to council’s debt burden, especially when they have said that local authorities should not ‘labour under the false impression’ that all of their costs will be reimbursed.

“An unprecedented situation requires unprecedented actions. The government must urgently cancel the Public Works Loan debt to free up spending power so that our Local Authorities can invest in the health of our communities.”


Note to Editors:

The Public Works Loan Board is a statutory body of the UK Government that provides loans to public bodies from the National Loans Fund.

Claudia Webbe MP

Member of Parliament for Leicester East

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