Funding black hole looms for region’s councils
COUNCILS FACE a multi-billion pound black hole due to coronavirus, a new report has found.
The County Councils Network – which represents all 25 county councils and 11 county unitary authorities – commissioned the study which found all 39 of the county and unitary authorities included could use up their available reserves in 2021/22 to cover a funding shortfall of £2.5bn.
It discovered county authorities would be particularly vulnerable to the fiscal impacts of a second wave of coronavirus, should this happen later this year, and a further outbreak and lockdown could increase the funding shortfall they face to an estimated £4.5bn over the next two years.
And savings plans meant to ease already strained budgets would now not be possible due to the outbreak.
The report said: “Government COVID-19 support funding to date has reduced the funding gap, but has not been sufficient to fully close it.”
Some £3.2bn has already been handed to local authorities by the Government to help with their response, with £1.3bn of that going to the councils analysed in the report, but the report found further funding would be needed to prevent councils finding themselves in financial trouble.
Carl Les, finance spokesperson for the County Councils Network and leader of North Yorkshire County Council, said: “This research shows the challenges facing county authorities and the severity of the potential impact on councils’ sustainability and provides important insights to inform government policy.”
The study found county authorities face a funding shortfall in 2020/21 of £752m due to COVID-19, which could be as high as £1.3bn. However, in the event of a second wave of the pandemic later this year could cause this to rise to £1.9bn, with councils having to spend more on Coronavirus-related
costs whilst losing income from services.
Mr Les added: “Building on this evidence, we want to work with Government to develop a comprehensive plan to support councils over the coming months and years.”
Simon Clarke, Minister for Local Government, said councils were being given “unprecedented support” including £3.2bn of emergency funding to tackle the financial pressures they are facing.
CARL LES: