Wirral Council calls for cancellation of local authority debt

Wirral council has passed a resolution (see below) calling for the government to cancel local authority debt held by the Public Works Loans Board to help stabilise local authority finances. The motion was moved by Jo Bird and seconded by Christina Muspratt, Labour councillors. It was passed by 39 votes to 20. Greens, Liberal Democrats and independents supported the motion. Only the Tories voted against.

It was agreed that Group leaders would contact Ministers and the motion would be forwarded to the council’s Policy and Resources Committee.

Cllr Jo Bird (pictured) said:

“Ten years of Conservative government cuts has created an ‘underlying condition’ for vulnerable local Council services. Chancellor Sunak has broken his promise to support Councils to do “whatever it takes” to deal with the covid pandemic. Yet this government quickly cancelled £13.4 million NHS debt. Cancelling local authority debt would quickly release working funds for cash-strapped Councils to help communities respond and recover from the devastating impact of covid. Wirral is particularly hard hit by recent imposition of Tier 3 restrictions, alongside other parts of Liverpool City Region.

Cancelling local council debt would free £4.5 billion that is currently being paid in interest and debt repayment, money that would be better spent on a programme of building council housing, helping to end both the housing crisis and provide decent work.”

Note: Local authority debt with the PWLB increased over the year to the end of March 2020 from £77.520 billion to £85.693 billion. Debt and interest payments increased to £5.505 billion.

CANCEL LOCAL AUTHORITY DEBT

Proposed by: Cllr Jo Bird

Seconded by: Cllr Christina Muspratt

To help save local services and build back better, this government should cancel local authority debt, just as NHS debt was cancelled earlier this year.

The financial crisis of local authorities is spiralling out of control as councils struggle to respond to the pandemic. The huge increase in expenditure comes on top of ten years of austerity which has severely weakened local authorities.

Austerity is to councils what ‘underlying conditions’ are to people who are vulnerable to the virus.

The government has told councils to do ‘whatever it takes’ and they will support them. Yet the funding offered thus far falls well short of spending associated with dealing with the pandemic never mind the big loss of income resulting from the lock-down. The Local Government Association has warned that without “a cast-iron commitment” to cover the coronavirus bill councils will begin to fail.

The CEO of CIPFA has spoken of “a financial tsunami of reduced income and increased costs”.

An unprecedented emergency requires emergency measures. One such measure would be the cancellation of local authority debt held by the Public Works Loans Board, currently over £80 billion. This would provide councils with around £4.5 billion extra spending power a year (the cost of servicing the debt last year).

In itself it would not resolve the funding issues resulting from austerity. However, debt cancellation would be a simple step which would provide significant funding on an annual basis and would help to stabilise council finances. The government itself has set a precedent by cancelling £13.4 billion NHS debt.

Wirral Council resolves to:

  1. Ask Group Leaders to contact ministers (in writing and on film) to cancel local authority debt.
  1. Refer this matter to the Policy and Resources Committee to consider that the Council support the Campaign for Council Housing’s call to Cancel Local Authority debt.

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