Excluding investment income from the government’s “burden sharing” scheme, put in place to aid local authorities through the Covid-19 pandemic, will hit councils engaged in long-term regeneration projects, a senior finance chief has warned.
In a wide ranging interview with Room151 Nikki Bishop, corporate director of finance at Trafford Council and president of the Society of Municipal Treasurers, added that government could have chosen a alternative way to allocate funds offered in the third tranche of Covid funding for councils, that could have more closely matched their financial needs.
Bishop expressed concern at the way investment income has become excluded from the “burden sharing” perhaps, she said, because of government concerns about the way local government has become involved in “speculative” property investment.
“That has particularly hit areas that long-term regeneration, such as the Greater Manchester region, where we’ve been investing in Manchester airport for 20 years or more,” said Bishop who added that other councils with large scale infrastructure projects on their books might be hard hit too.
So far Whitehall has offered local authorities a total of £3.7bn in three tranches. However, each tranche used a different distribution formula. Bishop warned that this means many councils have been left drastically short of funds. Her own council faces a coronavirus bill of around £37m while receiving only £13m from central government.
“The funding overall, the amount of funding that has been given out, is equal to the amount of cost pressures that we as a group in total have put on our returns to MHCLG,” said Bishop.
“But it hasn’t been allocated in accordance with the losses as they were recorded. …Which means that whilst MHCLG say that they have met, and they have met the cost pressures, at a macro level, they haven’t met them at a micro level.”
Bishop also called for the the current consultation on PWLB borrowing to steer clear of confusing genuine investment in regeneration with speculative property investment. “I think we must be careful of using a sledgehammer to crack a nut. There are very few councils, I think, that have been doing the very, very speculative stuff, most of what councils have been doing is investing for regeneration and growth.”
See the full interview with Nikki Bishop here.
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