Covid-19: Financial headlines

Over the past few months we have been looking into the financial impact Covid-19 is having on the Council. Here are the headlines:

• Our current estimate of the total financial impact of the crisis is £77 million

• Not all of this will impact in the current financial year - £50 million is the impact this year. In line with the experience of other local councils, this is both additional costs and lost income (eg parking, homes care charges) and also budget savings we cannot now make

• The remainder £27million is expected future loss of council tax and business rate income

• We have received £34million in government grant, so this is insufficient to cover even our £50million costs this year

• We will therefore have to draw in our reserves to make up the £16million difference

• Before the crisis, we had already identified £35million of reserves available to use over the next 3 years to support our budget, so this additional call will put further strain on our financial viability

• There was already a well acknowledged problem with shortage of funding for local councils, even before the crisis, particularly for social care costs: everyone knows that local councils had their funding cut earlier and harder than any other part of the public sector

• We will not “go bankrupt” this year, but in two years’ time we will run out of reserves that we can prudently use unless the government addresses the impact not just of the crisis

• Councils around the country are in the same position

• We have received other grants, but these have been to pass on to other people rather to use to cover our costs e.g. we have now paid out over £80million of grants to businesses affected by the crisis and £6millionfunding for care homes to cope with infection control has just been announced

• The current crisis has proved the importance of local councils being properly funded to provide support to the city not just in times of crisis but in the future