Co-operative councils brace for Covid-19 recession

'We may not have a blue light, but we are the fifth emergency service. Residents rely on us'

After 10 years of austerity, councils across England fear the worst is yet to come. Covid-19 has torn holes in their budgets and some warn that further cuts would make it impossible for them to finance their expenditure, potentially resulting in section 114 orders, which impose spending restrictions.

It’s a grim picture – but authorities in the Co-op Councils Innovation Network (CCIN) think the pandemic also shows the benefits of the co-operative, community-led approach to services.

South Tyneside Council – which kept all its libraries and community centres open despite austerity halving its budget in 10 years – has used community ownership to safeguard assets. Its leader Iain Malcolm says the approach brought in community groups and volunteers who have proven invaluable during the Covid-19 crisis. 

While demand for services is increasing in the context of Covid-19, councils are unable to secure additional income from sources like taxes or parking fees. In response to a rise in the number of people who are having difficulty paying rent, the council has introduced a hardship fund, and runs a food-shopping scheme for vulnerable adults.

“The money we have been receiving from the government has been helpful,” says Cllr Malcolm. But he adds that the government is backtracking on its pledge to fully reimburse councils after telling then to do all that they must to protect the vulnerable. Now central government is telling councils it will only cover specific expenses.

Related: How employee-owned and co-op care providers are tackling Covid-19

“We may not have a blue light, but we are the fifth emergency service. Residents rely on us,” he adds.

Similarly, Tameside Council was quick to respond to Covid-19 but now faces a funding gap. “Covid-19 has absolutely destroyed our budget,”  says council leader Brenda Warrington. 

The authority is looking at a £50m Covid-19 bill, which could increase if the crisis continues. The government pledged £3.2bn to help councils deal with the pandemic. So far, Tameside has received £13m. “That’s nowhere near the kind of costs that we’re into,” says Cllr Warrington. “We are hoping to receive more but at this stage there is no commitment from the government and the latest word is we will have to look at 20% cuts. Quite frankly, I do not know where we will get that from. We are already cut to the bone.

“We are hoping that the government make good of their promise of saying to us ‘spend whatever you need to and we will make sure you will be reimbursed’. That is the promise that was made and that’s exactly what we did in the best interest of keeping our people safe. But the government seem to be reneging on that promise now.”

Tameside is working with co-ops and voluntary organisations to provide local services. Projects include the Co-operative Network Infrastructure, initially known as Tameside Digital Infrastructure Co-operative, which brings together councils, the NHS and local businesses to share digital infrastructure and provide services.

Could projects like this offer solutions to the financial squeeze? Cllr Warrington says Tameside Council is working with credit unions and social housing providers to support those who need help. And, alongside partner organisations, it has housed all rough sleepers during the pandemic. “Some of them have been able to secure employment and a more structured lifestyle,” she adds. “We’ve been able to give them lots of support in different ways. Hopefully, we’ll be able to continue that. We do rely an awful lot on voluntary organisations and NGOs in providing lots of our services. It may be that we try to expand on that. But a lot of the voluntary services themselves are in difficulties or no longer in existence. 

“We can’t give them the grants that we used to years ago to help them keep going.”

Shaun Davies, leader of Telford and Wrekin Council, says his council is losing £60m a year, from a budget of £400m, as costs mount and income falls. 

In recent years councils have tried to rely less on government grants and explore other income, such as building or renting houses. At the same time, they face increased demand for social services and help for unemployed people.

Cllr Davies says his staff have been working overtime to support communities during the pandemic: but potential cuts mean the council may have to lay some of them off. Like Iain Malcolm and Brenda Warrington, he notes the government is backtracking on its pledge to cover the Covid-19 bill. “Clearly, the 20% cuts would be in addition to the 25% cuts over last few years,” he warns. “We are already in a situation where we are cutting the core of our services. The additional 20% will have to come from adult social care and safeguarding children and staff.” 

A local food bank set up in 2013 by charity Telford Crisis Network has seen a 200% increase in demand during the pandemic. The council funds its core costs and had to provide additional funding under lockdown. It also works closely with social enterprises, co-ops and voluntary organisations around breakfast club provisions for children. 

During the first three weeks of lockdown there were no free school meals. The council stepped in to provide food parcels, working with charities and other organisations. Cllr Davies thinks the free school meal voucher scheme could have been implemented “better and cheaper” had the government trusted local councils to manage it.

“CCIN is really helpful,” he says. “In times of crisis we can share ideas and best practice. One of the difficulties during crises is that everyone turns into a controlling mentality. Our ethos is we want to do things with communities, not to communities. To sort a problem you need to co-operate.” He thinks the co-op model is underutilised – but will be critical going forward. “I hope we don’t go back to normal, that there is a genuine reset moment,” he says. “The co-op way is much fairer and better for local people and local communities.”

Local government will also have to co-operate in a more meaningful way, he argues. “When empowered, regional and local authorities can sort things out. Take the care crisis: if each local authority was provided with resources and powers to cluster care homes in their area they’d do a better job.”

Sharon Taylor, chair of CCIN, is leader of Stevenage Council which, as the crisis began, launched a community response team and online hub which organises food supplies for the vulnerable and helps them access services.

The council has also started a fundraising appeal to help local causes. And, in response to a 90% increase in domestic abuse referrals, it has doubled safe spaces available during lockdown.

But the increased costs and falling income are costing the council £1m a month – and so far only £980,000 has been provided by the government.

“We want to try to avoid a section 114 notice,” says Cllr Taylor, adding that this might lead to job losses and cuts in services.

Some co-operative programmes are also threatened by the prospect of cuts, she warns. These include the Co-op Neighbourhood Management Programme, which encourages local communities to take ownership and see through neighbourhood improvements.

Cllr Taylor says the CCIN plays a crucial role in enabling councils to share best practices. It is planning a report on how co-op councils have responded to Covid-19 and how the co-op model could be used by councils to deliver social care.

Cllr Taylor thinks co-op values can help in the economic recovery post Covid-19 too, with a focus on community wealth building. “Seeing those who generate wealth in communities benefit more from it has the potential to create a much more equal society,” she says.

But while co-op working can ease some of the burden, it can’t compensate for the budget holes left by Covid-19. With another recession under way, local councils face a difficult year.

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