Gloucester council calls for cancellation of local authority debt

Kevin Stephens (pictured), leader of the opposition Labour Group on Gloucester council, informs us that his group moved a resolution (shown below) on cancellation of local authority debt at the September council meeting. The resolution was carried with all party support including the ruling Tories!

Kevin told us

“There is no doubt that the government has reneged on its promise to do whatever is necessary to deal with Covid-19 and local government would be reimbursed in full. Without significant increases in local government funding in Gloucester(shire)  and across the country we will see massive cuts in local services particularly adult social care and children’s services at a time when the pandemic is increasing rapidly, greatly undermining our ability to deal with the consequences and protect our communities and businesses. Cancelling local authority debt to PWLB would be a major boost to our finances.

I was particularly pleased that our motion received cross party support which illustrates the very real concerns across the political spectrum and the depth of feeling about the government’s failure to honoor its promise. It is very important that the local government family stick together and continue to apply maximum pressure on the government particularly as we move towards the comprehensive spending assessment.”

Resolution passed by Gloucester Council

RESOLVED that: –

“Council notes that local government has played a crucial role in combatting the Covid-19 pandemic, supporting local communities and will have a vital role to play in monitoring and containing the virus, restoring public confidence and reinvigorating our local economies as we move forward.

Council further notes that the cost of dealing with Covid-19 has placed an intolerable strain on local government finances. The Institute for Financial Studies (IFS) has estimated that councils will be left with a £2 billion funding gap this year. Councillor Richard Watts, Chair of the Local Government Association’s Resources Board has estimated that the funding shortfall could be at least as high as £6 billion.

The CEO of the Chartered Institute of Public Finance and Accountancy (CIPFA) has warned that: “…a financial tsunami of reduced income and increased cost is heading in councils’ way. While it’s vital that our health service is given everything, it needs to fight this disease, we must not forget the crucial role of services like public health, social care and all community services.”

In Gloucester we are forecasting a shortfall in funding this year more than £500,000. Our budget in future years will be constrained by predicted reductions in business rates, lost council tax income, lost income from commercial property and increased costs. Unfortunately, Government has stated that it will not reimburse councils for lost commercial income.

Council believes that it is vitally important that we are properly financed to be able to deal effectively with this unprecedented crisis and provide adequate support and services for our communities.

Cancellation of local authority debt would significantly reduce the burden on local authorities releasing around £4.5 billion extra a year, this would enable councils to begin to stabilise and grow their services in line with social needs. In Gloucester we currently pay over £1.5 million per annum in interest payments to service our debt to the PWLB.

Council resolves to:

1. Make representations to the Government and City MP that we should be fully reimbursed (as promised) for all the costs of dealing with the Covid19 pandemic including loss of commercial income.

2. Support the national campaign for the cancellation of local authority debt to the Public Works Loans Board and call on the Government and City MP to support this.”