Mayor demands government give Newham what it needs to support residents through COVID-19 crisis.
Mayor Rokhsana Fiaz and Councillor Terry Paul, Newham’s Cabinet member for finance, have demanded that the Government follows through on its promise to provide “whatever’s necessary” to fill the hole created in the Council’s budget by loss of income and extra spending used to support the borough’s residents through the Covid-19 pandemic.
A report considered by Mayor Fiaz and Cabinet members on Tuesday (14 July) and by Full Council on Thursday (16 July), shows that currently the financial impact on the Council of dealing with coronavirus is estimated at almost £61m.
To date Newham has received three allocations totalling £24.2m from the Government’s national funding tranches, plus £3.2m from a Council Tax hardship fund. Mayor Fiaz said: “While every pound is welcome, it is simply not enough given the scale of challenges facing Newham and our residents. The Government clearly doesn’t grasp the scale of the deprivation and inequality in Newham. That is why we continue to ask Prime Minister Boris Johnson for extra support in the form of a Covid-19 Deprivation Premium for those areas which have borne the brunt of the health and economic impact the pandemic has unleashed.
“Funding needs to properly reflect the scale of the challenges we face to tackle the significant impact coronavirus has had and will continue to have on our residents. We have the most furloughed residents than anywhere else in London, the highest increase in unemployment, and the largest number of young people that will feel the economic impact the most. Added to this is the corrosive impact of austerity over the past ten years which has entrenched inequality. Paying for the economic impact of Covid-19 cannot be carried by our people.”
Councillor Paul said: “It’s already been estimated by London Councils, the umbrella body for local authorities in the Capital, that Covid-19 will cost London boroughs £1.9 billion in 2020/21, equating to £767 million in extra spending and £1.1 billion in lost taxes and other income.
“The Government needs to fully appreciate what we are grappling with in Newham, especially as the Covid-19 health emergency won’t be over anytime soon. What is clear from the concerns being raised by councils across the country is that the impact on Council Tax and Business Rates alone could cause major budget issues next year if there isn’t further and significant Government support.”
Back in March Mayor Fiaz and the Council agreed for the first time in many years, a three-year budget which offered stability and a clear framework to help make residents’ lives better by addressing poverty and inequality through community wealth building and inclusive economy strategies, keeping young people safe, building much needed homes and tackling the climate emergency and the worst levels of air pollution in the country. The budget also allowed for investment growth of £10m each year above what is spent already, for new services or enhancing existing ones in line with the Mayor and administration’s priorities.
The report considered by Cabinet and Council revealed the immediate financial consequences for the Council and the wider economic factors that will need to be taken into account as the Council develops its response and recovery around the economic impact of Covid-19.
Councillor Paul said: “Some councils are saying that they face running out of cash. While Newham isn’t one of those, we cannot be complacent. The position we are in now is an important baseline for the hard work that has to begin on realigning and redefining our financial planning in line with our Covid-19 recovery plan and Government imposed restrictions on spending.”
The report makes clear that it remains difficult to be precise about the full financial impact of Covid-19 on the Council because of it can only estimate how long it will be necessary to deliver additional services, the pace of economic recovery locally and nationally, the ability of residents to pay Council Tax given their financial circumstances, and the levels of future funding from the Government.
The report suggests that further savings of between £8m and £15m may be required above the £45m that was agreed in March as part of the Council’s first three-year budget. That figure was itself agreed on top of identified savings of £200m made in Newham since 2010 because of austerity measures brought in by the Government and the freezing of Council Tax by the Council under the previous administration.
Added Councillor Paul: “We are modelling all aspects of the economic impact of Covid-19 which will anchor our recovery strategy. That’s why we will continue to push for councils like Newham to receive more money through a Covid-19 Deprivation Premium over and above what the whole of local government is calling for, to reflect the deprivation and inequalities that disadvantage our residents, including those from minority ethnic backgrounds who are disproportionately affected by coronavirus. Newham will continue to work with London Councils and the Local Government Association to lobby Government for additional funding needed by all councils.”
The report to Cabinet and Council also stressed that the impact of Covid-19 and the financial and wider economic consequences for the Council will not just be felt in 2020/21, but for years to come.
Next week, the Mayor will be launching the Newham Covid-19 Recovery Plan, in response to the economic impact of the pandemic on the local economy, which is anticipated to be significant as already almost half of the borough’s residents (48 per cent) are living in poverty after housing costs are taken into account, which is almost double the national level. Newham’s children are especially affected, as 67 per cent of them are living in households in poverty, which is double the number of children living in poverty across the UK when housing costs are taken into account. More recently, Government data shows that Newham has the highest number of furloughed workers of any local authority in the London, with 50,000 jobs at stake.
The Newham Covid-19 Recovery Plan will be making changes, where required, to the Council’s Community Wealth Building and Inclusive Economy strategies so that the economic impact of Covid-19 can be addressed, with three central features to the approach. The first is the absolute prominence of public health, which the Cabinet and Council report reflects; the second is bringing out more explicitly the Council’s work in tackling inequality – including race equality – in Newham, where 73 per cent of residents are from Black, Asian and Ethnic Minority communities; and the third is maintaining a commitment to tackling climate emergency.
More certainty will be brought to bear on future financial planning as the picture begins to become clearer and budgeting processes adjusted accordingly. Future policy options will be brought forward as part of a budget-setting process, which will involve as much public engagement as reasonably possible. Decisions about such options will be the subject of future Cabinet meetings and will be made in the light of all of the Council’s policy objectives, with a focus on delivering community wealth building and inclusive economy strategies, and climate emergency and public health requirements.