Recovery Guidance – Economic Issues
Financial impact on Local Authorities
Background and Context
During the recovery phase of an emergency, local authorities will often incur expenditure. This may be costs arising from clean-up, provision of security to damaged properties, repairs to infrastructure, provision of humanitarian assistance, or from many other sources.
Some of these costs will be covered by insurance policies or local funding streams, however some will not. In these instances, local authorities will often look to Central Government Departments for support in meeting the additional costs incurred.
This sheet will be reviewed to take into account learning from the summer 2007 flooding once the Pitt Review has reached conclusion.
Policy and Guidance
Bellwin Scheme of Emergency Financial Assistance to Local Authorities
The Government operates a scheme of emergency financial assistance (Bellwin) to assist local authorities in covering costs they incur as a result of work in coping with emergencies such as, typically, floods.
A ‘Bellwin’ scheme may be activated in any case where an emergency involving destruction of, or danger to, life or property occurs and, as a result, one or more local authorities incur expenditure on, or in connection with, the taking of immediate action to safeguard life or property, or to prevent suffering or severe inconvenience, in their area or among its inhabitants.
Bellwin is not, however, applicable for the recovery phase of an incident, since the grant is limited by Section 155 of the Local Government and Housing Act 1989 to contributing to immediate costs incurred on or in connection with safeguarding life or property or preventing inconvenience following an incident. It is important to be aware that precautionary actions and longer term clearing up actions are ruled out by the terms of the statute.
General guidance notes are issued from time to time, which set out the conditions applying and more general information about the Bellwin Scheme. This includes qualifying emergencies, who can claim, grant rates and thresholds and how to notify an incident or make a claim.
The Department for Transport will consider bids from local authorities for additional funding to cover reconstruction/repair work following an emergency. Each application is considered on its merits and requires Ministerial approval.
These arrangements are similar to the Bellwin scheme.
The Guidance for claiming emergency capital highway maintenance funding sets out how claims should be progressed with the Department for Transport (DfT). This guidance has been produced following the June / July 2007 floods and may be subject to change.
To be considered, the damage must be such that it needs capital investment to rectify, works must be required urgently and cannot wait to be completed over a number of years as per normal funding.
DfT expects a local authority to find funds from its own resources of up to 15% of the in-year Local Transport Plan highways maintenance capital allocation provided to the authority. There is no set minimum or maximum amount DfT would consider funding (subject to the 15% figure).
For funding issues relating to schools, see Damaged School Buildings.
Functions under the Civil Contingencies Act 2004 are not devolved and remain with the United Kingdom Government on an England and Wales basis. The Assembly Government cannot provide funding directly under the provisions of the Act. The Assembly Government does however have the power to fund Local Authorities, the Police and Fire and Rescue Services (local government bodies) who are all "category 1 responders" for purposes of the Act. The Government of Wales Act also gives the Assembly Government the power to do anything it feels necessary in respect of the whole of Wales, or any part of Wales, to promote the physical, social and economic well-being of its people.
The main source of funding for local government bodies in Wales is revenue support grant (which from 2008-09 onwards includes unhypothecated funding for civil contingencies). The Assembly Government also has the power to provide emergency financial assistance to meet specific recovery related events, should the need arise.
In Wales, financial assistance to local authorities, fire and police comes under the Emergency Financial Assistance Scheme – formerly known as the ‘Bellwin scheme’. These matters are devolved and there are separate but similar arrangements in place to those in England.
Emergency assistance is considered on a case by case basis using the issued guidance to help decide if assistance can be considered. It is important to understand that there is no automatic right to financial assistance but help is considered on a case by case basis when all factors are considered.
Representations can be made following any emergency and it will in the first instance be considered within the context of the issued guidance on Emergency Financial Assistance for Local Authorities (EFALA). Where appropriate and in the particular circumstances, financial help could also be considered for support that falls outside the scope of EFALA. This may be in the form of a grant under s31 of the Local Government Act 2003 which has wide powers to issues grants and set terms and conditions depending on the circumstances.
The Welsh Assembly does not hold a dedicated funding “pot” for EFALA. A token budget of only £1k is held. Where an emergency arises that the relevant minister decides support can be given to, the funding will need to be found from within reserves or moving funds from elsewhere within the Welsh Assembly's committed funding.
Information on the Bellwin Scheme in Scotland is available on the Scottish Government website.
District Councils in Northern Ireland are able to apply for funding from the Dept of the Environment in certain circumstances – ‘Schemes of Emergency Financial Assistance to District Councils’.
Roles and Responsibilities
Local and Regional
If the financial burden on a local authority is such that it believes it needs support from Central Government, the first point of contact should be through the relevant Government Office. Government Offices will liaise with Central Government Departments as appropriate.
Regional Development Agencies co-ordinate economic development in their regions. Local responders should engage with the relevant Regional Development Agency to ensure that all interventions to promote economic recovery after an emergency are co-ordinated. Responders should also have regard to the Regional Economic Strategy.
Lead Government Department
Communities and Local Government (CLG) is the lead department for considering Bellwin claims.
There is no agreed protocol to identify a Lead Government Department (or co-ordinating government department) in relation to claims that fall outside the Bellwin scheme. Each individual government department will consider what, if any, financial support it can provide.
See the Scottish Government website.
Links to Other Topic Sheets
Case Studies (Incidents and Exercises)
List of Contacts