Impact of Covid-19 on council finances set out in budget report

Impact of Covid-19 on council finances set out in budget report
08 July 2020

The impact of Covid-19 on the council’s budget is ‘significant’, with an expected shortfall of £8.064m this year, a new revenue budget monitoring (RBM) report shows.

Pressures on both income levels and increased expenditure have led to the deficit, despite a £6.231m Government grant to assist with the impact of the pandemic.

Councillors have reassured residents that the shortfall can be covered in the short term by the council’s reserves but have called on the Government to provide more support to local authorities to see them through the long-term effects of the crisis.

The RBM report is an early forecast for the remainder of 2020-21 and is based on financial data from May and service managers’ projections for the rest of the year.

Although the majority of the council’s services are now operating as usual – or preparing to reopen in some form in the coming weeks – there is a lot of uncertainty in a number of areas.

Key financial pressures facing the council include a reduction in council tax and business rates collected, uncertainty over the operation of home to school transport if social distancing remains in place by September and increased spend in adult social care as the council looks to support providers to maintain services.

Reduced income in facilities such as the Darlington Hippodrome, the Dolphin Centre and council car parks while the free parking offer remains in place will also have an impact on finances.

Councillor Charles Johnson, deputy leader of the council and cabinet member for resources, said: “There is no doubting that the pandemic has had a major impact on our finances as a council. We are fortunate that we were in a strong position prior to this situation, which will see us through in the short term with no need for rash decisions or changes to the way we operate.

“But, with no way of knowing how our recovery will go – nationally or locally – we will continue to lobby the Government to provide additional support to local authorities to ensure we can provide services to the most vulnerable in our community.

“Councils are the bedrock of any community, keeping vital everyday services ticking over and providing support to those in need. The Government must help us get back on our feet, so that we can do the same, in turn, for others.”

The RBM report will be discussed alongside a broader overview of the council’s Covid-19 response at the next meeting of the cabinet, which will take place on Tuesday, July 14.