Jeff Smith,  Labour MP for Manchester Withington, took to the House of Commons “virtual chamber” yesterday to urge the Government to reimburse Manchester City Council for income they will lose because of coronavirus.

At the beginning of the crisis, ministers assured struggling local authorities that they would be fully reimbursed for the extra financial burden caused by the pandemic. Comments from Ministers later talked about Councils “sharing the burden”, implying that this might not be the case.

This sparked widespread fears that many local authorities could face financial ruin and prompted Sir Richard Leese, Leader of Manchester City Council, to write to the Prime Minister warning that without further help Manchester could see a ‘catastrophic impact on frontline services’ because ‘there are no easy cuts left to make’.

The money Manchester has so far been allocated will only cover around 12% of what the Council is set to lose in income as a result of the lockdown. Manchester City Council has been hit hard by 10 years of austerity, having already lost £380 million from their budget since 2010. Because of underfunding by central Government, the local authority has become particularly reliant on income from sources like car parking, planning fees and commercial activities such as hire of venues for (now cancelled) events like “Park Life”. In addition, the collapse of the air travel industry means that the Council’s dividend income from part-ownership of Manchester Airport will be massively hit.

This income underpins the delivery of vital council services and has been drastically affected by lockdown measures, with the council expecting to lose £125.6 million this financial year alone. Without reimbursement from central Government, it may struggle to provide some of the most basic services needed to support vulnerable and disadvantaged people in Manchester, let alone rebuild effectively when the crisis is over.

Jeff took part in questions to the Housing, Communities and Local Government department yesterday and made the case for more funding for Manchester. Laying out what the Council was set to lose and how raising income has become a vital way of funding local services, he asked the Minister to ‘pledge to fully reimburse councils for lost income, so they can have the certainty they need to carry on their vital work on the front line’.

The Minister for Housing, did not commit to a specific amount of further funding but promised that ‘more will come’ and reiterated the Government’s intention to ‘work with local authorities to ensure that they get the help they need to see them through the crisis’.

Jeff said:

“It’s at least encouraging to hear the Government promise that Manchester will get more money, but Councils need certainty over future income so they can continue to coordinate the local fight against coronavirus. To avoid long term damage to essential local services, the government must reimburse Councils’ loss of earnings in full. I’ll keep pressing the Government on this until they deliver.”