Councillors have agreed plans to meet a £10 million financial gap in West Suffolk Council’s budget due to the impact of Covid-19.
West Suffolk Council’s Cabinet has also urged the government to provide much needed funding to help councils meet the financial challenge of the pandemic.
Like many authorities across the country West Suffolk Cabinet was looking at how the virus has impacted on the current year’s budget and its medium-term plans.
Due to the pandemic West Suffolk Council has been focused on supporting businesses access millions of pounds of government grants and protecting the most vulnerable by supplying food, medicine and support. All this while delivering services which themselves have been impacted by the virus.
The estimated impact of Covid-19 is £10.2 million (including an estimated £8 million loss of income) on the council budget this financial year 2020/21.
The government has given £2.141 million to help with the impact of Covid-19 (around £1.7 million remains of that for this financial year). This leaves the council to find around £8.4 million this current financial year to balance the budget. The government has also promised funding to compensate for loss of income but there has been no clarity given on what this will mean for West Suffolk Council.
Cabinet agreed at their meeting yesterday (July 21) that balances and reserves should be used to help fill the gap this year. The report they debated also highlighted the ramifications of having to repay them and the ongoing loss of income could mean difficult decisions effecting funding and services in future years.
Due to the effects of Covid-19, on the council budget the report suggests utilising in full the general fund balance and other reserves, totalling £6.1 million. In addition, it proposes to make some general cost reductions and mid-year savings measures to continue to protect essential services, deliver what communities, businesses and economy need while balancing the books for this financial year.
The report to cabinet highlights that the council is in a stronger position thanks to prudent investment and strong financial leadership. The council’s ability to respond to Covid-19 has also been aided by the council’s families and community approach which has meant the authority work with local communities and volunteer groups to deliver tailored solutions and initiatives.
The government has recently announced a further tranche of funding for local authorities to help with the costs associated with Covid. West Suffolk Council did receive £277,769, this month bringing the Covid grant allocation from the government up to £2,141,529 in total. This amount is still short of the total Covid related costs (approx. £2.3m expected till end of this financial year and including March 2020 costs).
Guidance and details are still awaited on what funding promised for loss of income means for West Suffolk – this makes up the majority of the budget shortfall. Any additional funding received will look to take pressure off the longer term need to replenish the balances and reserves used to assist the council through the current financial year.
Only 20% of services are paid for by Council Tax with little or no revenue support grant funding from the government. The rest of the funds the government expects councils to make through generating income.
Councillors have already called on MPs, ministers and the government to provide fairer funding for local authorities which are left to find in the year through savings, balances and reserves.
John Griffiths, leader of West Suffolk Council, said: “We have taken a leading role in the response to Covid-19 but this has an effect on our budget. Our work with partners has meant the most vulnerable have been able to get medicine, food and support while businesses have been able to access millions of pounds in government grants. Equally we continued to deliver services despite a severe loss of income and capacity.
“But this comes at a cost and even with government funding this year we have a £8.4 million gap in our budget to meet, after allowing for the government funding received to date. We believe we will be able to meet this challenge this year, but it will of course have consequences for what we can afford in following years.
“We are not alone in this – councils across the nation are having to change their budget mid-year and facing major financial challenges. But what sets us apart is that by creating West Suffolk Council, making prudent strategic financial decisions and protecting savings we are in a much better position than many.
“We never wanted to be in this position but our strategic framework, vision and aims still hold true. They also put us in good stead in the swiftness and effectiveness of our response to the pandemic and will help us move forward as part of the recovery phase. That said, we have to face the financial situation and reality now so we can progress things for our residents in the best possible way in the future. We are pushing hard for further funding and certainty over our future funding from government.”