More than £1m will be taken from council reserves to cope with coronavirus costs
- Credit: Nick Butcher/Ian Burt
More than £1m will need to be taken from a Norfolk council’s reserves to plug a funding gap caused by coronavirus costs - and the government has been urged to stump up more cash to help balance the books.
Norwich City Council faces a £1.3m overspend for the first financial quarter of the year, despite extra cash the government had given to City Hall.
And Alan Waters, the council’s Labour leader said £3m of savings are needed at City Hall to prevent an even greater impact on the council’s finances.
A report which will go before the council’s cabinet next week says tackling Covid-19 has led to extra costs from housing rough sleepers, providing food for the vulnerable and making it possible for staff to work from home.
And the effects of the pandemic has meant the council has lost income, including a forecast lost of between £3m and £4.4m because the city council-owned car parks have been used so little since lockdown was introduced in March.
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While the government has given City Hall £1.8m and a new scheme has been created to help with lost income, Mr Waters said it did not go far enough and £1.3m will have to be taken from reserves.
He said: “At the start of the pandemic, government ministers made it clear to all council leaders that they would fully compensate local government for the financial impacts of Covid-19.
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“We were assured that we could focus on supporting our residents without having to worry about making cuts. Yet, despite these assurances, here we are five months on, having to take £3m out of council budgets and still facing an overspend.
“The fact that we have been able to find this level of savings in year – while protecting front line services – is testament to the innovative ways we’ve been able to rapidly adapt services and effectively manage council finances.
“We are also grateful to our residents who have continued to pay their council tax and business rates – these payments are essential to fund essential local services.
“However, Covid-19 is still with us and the pressure on our finances – and that of the wider sector – remains. Indeed, some councils have publicly stated that if they don’t receive more money soon, they will effectively have to declare themselves bankrupt.
“Thankfully, because of the way we’ve managed our budgets through a decade of austerity, Norwich is not in that position. However, I’m calling on the government to make good their pledge and provide further funding to all councils to see them through the challenging times ahead”.
An MHCLG spokesperson said: “We’re giving councils unprecedented support during the pandemic to tackle the pressures they have told us they’re facing. Norwich City Council has received over £1.8m in emergency funding. Additionally, its core spending power increased by £536,000 - an increase of 3.2pc in 2020/21 even before emergency funding was announced.
“In total Norwich has received more than £94.3m from across government to support the council, communities and businesses in the area.”
Norfolk County Council leaders have warned they are facing a daunting £45m budget gap next year and a £129.7m budget gap over four years due to the “extremely challenging” financial situation, worsened by coronavirus.