Thank you to the constituents who have contacted me about funding for local authorities during the coronavirus outbreak.
Local authorities have been at the forefront of the response to the coronavirus outbreak in our communities where the most vulnerable and deprived have been particularly at risk. The spread of the virus has placed unprecedented demands on local services and I am proud of our key and public sector workers in Selby and Ainsty.
Significant additional funding has been provided to local authorities to support them as they respond to the outbreak. £7.2 billion in funding has been made available for councils to relieve local pressures and help vulnerable people. This includes £4.6 billion in unringfenced funding, £1.1 billion for care homes, £300 million to support Test and Trace as well as funding allocated to councils from the Local Alert Level system and a number of grants to support communities and vulnerable people.
A further £32 million is being provided to councils to support clinically extremely vulnerable people for the period that national restrictions are in place, alongside the £170m Covid Winter Grant Scheme to support children, families and the most vulnerable over winter. In light of the new restrictions, £2.2 billion will be given to businesses across England to support jobs, livelihoods and local communities. This funding builds on the recent Local Government Finance Settlement that provided the largest increase in a decade in spending power for councils in England.
I know that many councils are worried about what lies in the future. The Government has asked local councils to approach the Ministry of Housing, Communities and Local Government if they are experiencing unmanageable pressures or concerned about their financial position. Councils can also claim funding through a compensation scheme for lost income from sales, fees and charges until the end of June 2021. The income recovery scheme covers local council losses over 5 per cent of planned income at a rate of 75p for every pound, encouraging councils to minimise losses where they can and providing certainty where needed. This comes alongside a proposal for a phased repayment of council tax and business rates deficits over three years rather than one.
I welcome the Chancellor's further commitments to councils in the Spending Review. The spending power of local authorities is expected to increase by 4.5 per cent in 2021-22. Separately, over £3 billion additional funding is being provided, which includes £1.55 billion for service pressures, £670 million for council tax support and £762 million to compensate lost tax revenue. Funding to address homelessness and rough sleeping is being raised to over £750 million, alongside £1.3 billion toward adult and children's social care. £220 million is being allocated to help local areas prepare for the Shared Prosperity Fund and £621 million will be made available through the Towns Fund. I am confident that these measures will provide local communities with the resources they need to recover from the outbreak.