Virus costing Greater Manchester authorities £732m

New analysis undertaken by the ten Greater Manchester councils and Greater Manchester Combined Authority (GMCA) shows that the impact of coronavirus and the actions taken to manage the pandemic will be in the region of £732 million by the end of 2020/21 alone.

The analysis is an estimate of the most likely impact based on current rates of infection and expectations around lockdown, and is not a worst case scenario.

Made up of additional costs faced in delivering the Greater Manchester response to the crisis of £236 million, together with lost revenues of £496 million, the authorities say that, when taking into account government grants and reserves, the total net deficit facing local government finances is £368 million.

The ten councils have estimated that they will face additional costs by the end of 2020/21 alone of £225 million. Funding for adult and children’s social care makes up 40 per cent of the additional expenditure by councils as a direct result of the health pandemic. £71 million will go on adult social care, which includes an increased demand for care and support, direct purchase of personal protective equipment (PPE) and reduction in charging income (day support). An additional £18 million will be spent on children’s social care, £13 million on education, £33 million on housing, highways and public health, and the rest on cultural services, environment and regulatory services and finance and other areas.

A total of £92 million of reserves have been allocated by all ten councils to help plug some of the funding gaps. The Ministry for Housing, Communities and Local Government has provided two tranches of funding to Greater Manchester councils totalling £167.68 million, which together with other national funding for track and trace, infection control and hardship grants will reduce the impact on finances from £634 million to £390 million.

Andy Burnham, said: “The Covid-19 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-19 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.”