Local government cost of coronavirus totals £723m in Greater Manchester

Analysis by Greater Manchester Combined Authority and its 10 local authorities have calculated that coronavirus pandemic will have cost the city-region’s local government £732 million during 2020/21.

The cost has been calculated from both the additional expenditure from councils in response to the crisis, such as a financial support and increased services, as well as lost revenues from business rates and council tax holidays. Calculations are estimates of the most likely outcome, rather than a worst-case scenario, and assumes there will not be a second wave of cases and further reimposition of lockdown conditions.

Greater Manchester’s 10 councils estimate additional costs of £225 million by then end of 2020/21, £71 million of which comes from an increased need for adult and children’s social care. An additional £18m will be spent by local government on children’s social care, £13m on education, £33m on housing, highways and public health, and the rest on cultural services, environment and regulatory services and finance and other areas due to the social and economic costs of the coronavirus pandemic.

Analysis found a shortfall in council income estimated as coming from:

• Commercial income – £167m (42%)
• Business rates losses (net impact after compensation from central government for retail and leisure sector relief) – £69m (17%)
• Council tax losses – £97m (25%)
• Sales, fees and charges – £61m (15%)

Council tax is the largest source of income for most of Greater Manchester’s 10 boroughs, accounting for up to 67% of income, but has been reduced by the pandemic as more people have become eligible for support, or deferred or defaulted on payments. The majority of commercial income for the councils is due to their ownership of Manchester Airports Group, which has been severely impacted by travel restrictions.

Mayor of Greater Manchester, Andy Burnham, said: 

The COVID crisis has landed heavily on our councils after a decade of severe cuts. Even so, they have been working wonders in recent weeks to support people and communities through this and now need and deserve the Government’s direct help. Councils will be crucial to the recovery from COVID and getting communities back on their feet, but won’t be able to play that role with a black hole in their finances.

“This analysis lays bare the scale of the funding challenge facing Greater Manchester’s councils. Without urgent support, this funding crisis will engulf local government and endanger the vital services that councils provide to the community, particularly for the most vulnerable.

“We know that this virus has hit the poorest communities hardest. We have also heard the Government’s promises to “level up” the country. The time has come for it to make good on those promises and give Greater Manchester and its councils the resources they need to lead recovery and build back better.”