Councils' plea to government as they face financial black hole

By Derek Davis

23rd Apr 2020 | Local News

East Suffolk District Council concerns over finance
East Suffolk District Council concerns over finance

Councils serving the Felixstowe peninsula faced a black hole in its finances once the Covid-19 crisis is over after a huge drop in income.

Local authorities across Suffolk, including East Suffolk District Council and the county council, have issued a plea to the Government for more cash to tackle the coronavirus crisis, as the public purse has taken a multi-million pound hit in Suffolk in just one month.

One council predicted that additional expenses and income losses would be three times higher than the initial government injection of support, while another said its meagre financial package covered just a day and a half of the losses it faced this month.

The coronavirus crisis has battered authorities as they face the double whammy of extra costs for relief efforts coupled with a big dip in income.

Discounts have already been issued to homes financially struggling to pay council tax and council house rents, but council tax increasingly makes up a smaller and smaller part of how public services are financed.

Councils now use investments in commercial property, as well as income from leisure centres, theatres and car parks to bring money in, and help limit the amount in council tax rises needed to pay for vital services.

Lockdown has effectively slashed that income entirely.

Those vital services funded include waste collection and recycling, foster care services, highway maintenance, grass and hedge cutting, street lighting, adult care provision, fire services, Trading Standards, planning permissions and environmental health to name a few.

Councils across England were invited to submit a Delta return to the Ministry of Housing, Communities and Local Government (MHCLG) last week – a form which summarises the financial hit they have taken.

Outlined below is the investigation carried out by the Local Democracy Reporting Service in Suffolk.

East Suffolk Council, which is England's largest district council, received just over £121,000 in the initial coronavirus response settlement, which has helped cover the £95,000 additional costs for April, but doesn't go anywhere near far enough to bridge the gap from the £1.216m lost in income for the month.

While the additional costs are much lower than Ipswich Borough for example, the council said that doesn't include expected hits in housing, corporate and environmental services that cannot yet be calculated because it is too soon.

However, the finances here don't look as immediately threatened to such an extent as Ipswich.

Its report added: "The council's financial planning is such that in the short term we have sufficient investments maturing which could cover any abnormal increases in cashflow."

Suffolk County Council recorded additional expenditure of £56m for the end of the 2019/20 financial year and an income loss of £7m.

Its Government support fund last month was £20.7m, but doesn't even cover half of the extra costs incurred for one month.

Reserves are north of £50m at the moment, which is a stronger position than many councils are in nationally, but without any Government support or income at all it wouldn't take much more for those to start dwindling rapidly.

Conservative cabinet member for finance, Gordon Jones, said: "It will take some time before we are able to fully understand the true financial impact of Covid-19 on council services.

"We currently estimate that the additional costs and income lost during the lockdown period may already be three times more than the £20.7m funding that the Government provided us in late March.

"The largest area of spend for us is adult care and the costs have escalated greatly in this sector since the coronavirus took hold in March.

"We are using the money we have received from Government to meet some of these additional costs already, but as time moves on there are further, continuing additional costs for providing care support to adults and children due to the social distancing and resourcing restrictions we all need to work with. In addition, we will continue to source PPE from all available avenues to reduce infection and protect staff and residents."

     

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