The government has declined to reassure town halls that they will be fully paid back for financial losses during the covid-19 crisis - shortfalls local leaders warn would result in ‘catastrophic’ further cuts to frontline services.

At the start of the pandemic, local authorities were assured by ministers that they would be reimbursed for the extra financial burden of the pandemic, currently predicted to reach more than £500m across Greater Manchester’s ten councils alone this financial year.

However, at today’s Downing Street press briefing, environment secretary George Eustice told the M.E.N. that the government’s bail-out so far - which most councils here estimate will cover between half and a third of their losses, but in Manchester's case much less - was ‘the right approach’.

In March, Chancellor Rishi Sunak promised to do ‘whatever it takes to get the nation through’ the pandemic during his Budget speech, while communities secretary Robert Jenrick urged town halls not to put off spending decisions because government would be ‘supporting you and ensuring money flows to you’.

(Image: Manchester Evening News)

Initially £1.6bn extra funding was announced for councils, followed by a further £1.6bn last weekend.

In Greater Manchester, however, local authorities are expecting costs - and particularly loss of income - to far exceed their share of that, totalling £541m by next April.

Manchester council alone is expecting a £126m loss of income as a result of the lockdown, which has hit fees, charges and investments hard, along with a £30m rise in costs over the next six months.

So far the money expected from government is expected to cover around 12pc of that sum. That could leave it facing further cuts totalling a third of those it has already carried out since 2010.

Asked by the M.E.N. at today’s Downing Street press briefing whether the government intends to honour its ‘whatever it takes’ policy where councils are concerned, Mr Eustice insisted the package so far was felt to be right.

(Image: PA)

“The government recognises of course that these are extraordinary times and our local authorities have indeed taken on additional burdens as a result of this crisis,” he said.

“And it’s in recognition of that, as you alluded to in your question, that Robert Jenrick announced a package of additional financial support for local authorities.

“We estimate that that is the right approach to support them through this difficult time.

“Of course some of the things that they’re doing now they’re often geared up to do anyway and they have their own emergency response centres and emergency response procedures that are in place and that they do on a regular basis.

“But we recognise that there are new burdens and that’s why there’s been that additional financial package announced by the secretary of state and MHCLG.”

Councils in Greater Manchester have already lost over £1.7bn in funding since 2010.

In that time they have come to rely increasingly heavily on income from sources other than taxes and the government, such as planning fees, trading services and commercial investment, which have dried up during the lockdown.

Town halls are also expecting to write off the £110m they were forecast to get from their ownership of Manchester Airport this year, with Manchester particularly hard-hit due to its larger stake in the company.

Last week its Labour leader Sir Richard Leese has warned of ‘catastrophic’ cuts to services if government does not step in, a point echoed by by other Labour leaders and Andy Burnham.

Privately, Tory councillors are also concerned.

One senior Conservative councillor told the M.E.N: “Councils are on the brink of financial ruin with increased costs and reduced income.

"Money already sent to councils from government is appreciated, but is merely a sticking plaster for what’s to come.”