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‘Most likely’ financial impact of the coronavirus will leave significant shortfall in council budgets

Published: Wednesday, 22nd July 2020

The impact of the coronavirus will ‘most likely’ leave a significant shortfall in city council budgets, according to latest financial modelling.

Stoke-on-Trent City Council’s cabinet today (Tuesday) discussed the authority’s response to the pandemic, and progress being made to reduce the risk of infection and lead the city’s recovery. Council leader Abi Brown also announced at the meeting that the cabinet has written to Secretary of State for Housing, Communities and Local Government Robert Jenrick to call on the government to give urgent additional funding to local councils.

Dealing with the coronavirus continues to place a significant additional financial burden on the council. Based on the most recent forecasts the total direct income and expenditure pressures faced by the authority will be in the region of £27m.  

In response to these predicted pressures, the government has confirmed the authority will receive a grant of around £18m. The government also announced late last week a new Next Steps Accommodation Programme fund to support vulnerable people into housing following the easing of the lockdown, and the council will be bidding for this funding.

The coronavirus is likely to impact on the amount of council tax and business rates the authority is able to collect. The government has announced that these tax losses can be repaid over three years instead of one, and there is expected to be further clarification on irrecoverable council tax and business rates losses in the government’s autumn spending review.

Council leader Abi Brown said: “We have been very open and honest around our response to the coronavirus and the impact it has on our funding. We have listened to and acted on national legislation and taken every appropriate step to halt the spread of infection, support and advise residents and businesses and protect the most vulnerable in our communities.

“We have undertaken significant financial modelling from the start of the pandemic to understand the impact on budgets and to plan for a range of potential financial outcomes.

“It is clear that we need additional funding to meet the financial pressures that we face. We welcome government announcements on funding streams in response to the coronavirus, and we are continuing to lobby hard for the city.

“As a cabinet, we have today (Tuesday) written again to the Secretary of State to outline our significant financial pressures and to explain our role at the forefront of tackling the pandemic in the city. We have urged government to give further recognition of the need for additional financial support to enable us to lead our city’s recovery from the pandemic.”

Current forecasts show that the ‘most likely’ spend of £27m will be split, with: 75 per cent towards supporting children and families, adult social care and housing services; 24 per cent on maintaining key infrastructure works and projects during the lockdown and through the recovery; one per cent on other services and lost income.

Cabinet was also updated on the new powers that the city council has to close specific premises, cancel events and close public spaces in response to local outbreaks. Councils in England have been given these new powers to manage local outbreaks of coronavirus. The additional powers have been put in place to allow local authorities to act more quickly in response to outbreaks where speed is paramount and to help in situations such as those that have been seen in Leicester where there have been local lockdowns.

Meanwhile the number of confirmed Covid-19 cases in the city continues to fall. For the week 6-12 July, the rate of new infections for 100,000 people in the city fell from 12.12 to 10.16.

Councillor Brown said: “There is a very consistent downward trend in infection rates, and the latest figures show we are not one of the 60 local authorities with an increase on their previous weekly rate. This is really good news, and much credit needs to be given to all residents who continue to follow the national health guidance.

“However, this is not cause to be complacent. We know that our infection rate is the highest in the West Midlands and we must all continue to work hard to stop the spread of the virus. Our infection rate is significantly lower than in Leicester, which has had a local lockdown, and we remain outside the top 20 local authorities in the country. We want to do all we can to avoid a local lockdown in the city.”

The authority is also reminding residents of national guidance which will mean wearing face masks in shops and supermarkets is compulsory from Friday 24 July. The changes will mean that shop owners can refuse entry if face masks are not worn, and enforcement will be done by the police who can issue fines of up to £100.

Councillor Brown said: “We are reminding all residents of these changes and to follow the guidance for the greater good of the city, to stop the spread of the virus.

“It is important to use face coverings properly and wash your hands before putting them on and taking them off. You can make face coverings at home – the key thing is they should cover the mouth and nose.

“Face coverings do not replace social distancing. If you have symptoms of the coronavirus, you must isolate – wearing a mask does not change this.”

For more information and advice on coronavirus (Covid-19) please visit Public Health England and the NHS

All residents are reminded about the critical importance of regular handwashing with soap and hot water for 20 seconds. The significance of this action cannot be underestimated.