Greater Manchester councils still facing 'really scary' £400m coronavirus black hole despite bailouts

Andy Burnham described the situation as 'dire', while Bolton's Tory leader joined with Labour chiefs to call for more funding - but warned against being like 'Oliver with a begging bowl', always asking for 'more, more, more'

Greater Manchester’s councils are facing a ‘dire’ £400m shortfall even after a second Covid bailout to town halls across the country, according to local leaders.

At the same time Metrolink is still looking at a £30m loss by the end of the financial year as a result of lost passenger numbers and social distancing.

Trafford’s Labour chief labelled his council’s financial situation ‘really, really scary’ and warned that closing all the borough’s libraries and axing 10pc of staff would still save less than a third of the amount it needed to find.

All ten council leaders, including Bolton’s Conservative boss David Greenhalgh, have agreed to lobby the government for more funding and to hold an emergency meeting on the issue next month.

However Coun Greenhalgh also cautioned against continually asking for ‘more, more, more’ like ‘Oliver with a begging bowl’ and warned Britain would be paying off the costs of the crisis for generations.

Government insists it has reimbursed councils here for all their ‘coronavirus-related pressures’ since March - but leaders say that largely overlooked the bulk of the financial hit, which has been lost income.

According to an update put before leaders this morning, the Covid crisis will deal their councils a £574m financial hit by the end of July.

But ministers have only compensated £168m to date. Town halls believe that is partly because ministers have failed to recognise the scale of the income they have lost from fees, charges and investments, which have also taken a hit during the pandemic.

Officials are currently forecasting £406m gap by the end of July, with local leaders questioning how they will balance this year’s books.

The forecast is without any potential costs that could come afterwards, says the report, that could come from a period of ‘living with Covid’.

Greater Manchester mayor Andy Burnham said: “There are huge unresolved issues here and I don’t think we can do full justice to them today given the scale of what is facing individual districts and Greater Manchester.

"The outlook is dire and there needs to be a substantial response from government to the position local authorities find themselves in.”

The report also details the financial impact on Metrolink, which received an initial £11.6m bailout from government a few weeks ago, later added to with a further £13.3m after vociferous lobbying from cities with light rail networks outside London.

That cash is only designed to last until August, however, and the GMCA’s treasurer Steve Wilson told the meeting that the tram network was looking at a £30m loss for the rest of the financial year without further support, due to fixed operating costs and potentially vastly reduced passenger numbers.

At the meeting Labour leaders lined up to blast the situation faced by councils, which was also raised this morning by the Local Government Association’s Tory leader James Jamieson - who warned town halls were being ‘stretched to the maximum’ and could need a further £6bn bailout to plug the gaps.

Trafford’s Labour leader Andrew Western described his council’s situation as ‘really, really scary’, pointing to a £24.5m shortfall once reserves and Covid money from government had been used.

“If we were to close all of our libraries, which obviously isn’t something that we would ever want to do, that would only save £1m,” he said 'by way of example'.

“If we were to get to a point where we were to make 10% of our workforce redundant that would save us around £7m.

“These are pretty extreme measures and I think it’s really important when we talk about these sorts of issues that people understand the scale of what we’re dealing with there, because we were told that we would be fully funded and we absolutely have not been.”

He added: “We’re talking about a devastating impact on each and every one of the councils in GM and indeed around the country.”

Bolton’s Tory leader David Greenhalgh said he would join Labour colleagues in lobbying for more cash, but asked for a ‘reality check’.

“First of all I think it’s important I say I will absolutely join the rest of you in lobbying for that extra money,” he said, acknowledging the comments from the LGA’s Tory leader.

“We all know we’ve been disproportionately hit, therefore I’m absolutely committed to lobbying and doing all I can.

“But I do think we have to do that in the context of recognising the unprecedented level of support that government has already given.”

He noted that councils were already asking ministers for money on other, pre-Covid things - including buses and clean air - and warned: “We’re out there with our hands outstretched to them for all those areas as well.

“While all these issues for us are key, there may be a degree for us to prioritise moving forward. At the moment we’re just like ‘more, more more’, we’re like Oliver with a begging bowl, aren’t we?

“And we do want more and we must absolutely make sure we do get more. But when we get those finances, there is no doubt we will be paying this off for generations to come.”

A special meeting of the GMCA will be held on June 24 to discuss the financial impact going forward.

In a statement earlier today, the Ministry for Housing, Communities and Local Government insisted it had more than covered the costs incurred by Greater Manchester councils to date, although the numbers it cited differ from those reported by the GMCA.

“Councils across Manchester have received £168m extra government funding against the £136.17m coronavirus-related pressures they have reported for March to May,” said a spokesman.

“This is to deal with the immediate pressures they are facing during the pandemic, including to accommodate rough sleepers, which we continue to fund.”

The department highlighted £3.2bn in funding handed out to councils across the country since the pandemic began.