The estimated budget shortfall for 2020/21 facing the council due to COVID-19 has risen from £9.5m to £10.3m.
This has increased despite an extra £1.6m of emergency funding being received from the Government. The council estimates it will receive £5m less income this year, with things like parking income, sports pitch hire and other fees significantly dropping, alongside a £4.6m potential shortfall in the collection of local council tax and business rates.
In June, a report to the council’s cabinet estimated the overall gross cost for 2020/21 could be in the region of £15m to £20m. In the latest report to cabinet (item 4, Tuesday 15 September), this has been revised upwards to £22.3m, which is currently offset by £12m of emergency grant funding.
The budget shortfall for 2020/21 due to COVID-19 is in addition to the already predicted £23.4m up to March 2025. However, the potential size of the financial shortfall in each of the next four years could change and increase significantly. This will depend upon many factors including how much further support is received from the Government, how our income continues to be affected, and increased pressure and demand on services. These are all very difficult to determine given the current level of uncertainty.
Cllr Ian Gilbert, leader of the council, says: “These are unprecedented times and local government has never faced such a challenge whilst also wrestling with so much uncertainty.
“Like all authorities across the country, we have been hit hard financially by the impact of the COVID-19 pandemic. Despite this, we have managed to continue to deliver essential services to those who need them, with the support of our staff, volunteers, partners and local businesses.
“At the moment, although the overall financial impact is not completely clear, we know that we will have a significant budget shortfall to meet this year and in future years. We are basing our estimates on projected loss of income, additional pressures on key areas such as social care where we have seen an increase in demand due to the pandemic, and also the financial challenges that came with easing lockdown and implementing new measures when they have been needed.”
Some examples of this support has included food deliveries to our vulnerable residents, putting over 120 rough sleepers into temporary accommodation, providing extra resources for our local adult social care providers, investment in IT to allow staff to work remotely and financial support to keep leisure centres and cultural venues afloat. In addition our income has reduced in areas such as car parking, sports pitch hire, and with deferral of rents for our commercial tenants.
Cllr Gilbert continues, “We have made difficult decisions to keep people safe at a time of emergency, and as life slowly eases back to normal we are continuing to make economic recovery a priority. This will be high on the Council’s agenda as we prepare to continue to respond to these demands as part of developing a balanced budget for 2021-2022 in the most challenging of circumstances.
“We have a number of major projects in the pipeline as a borough, and the investment they will bring will be so important to drive economic growth, encourage inward investment, create jobs, and support and invigorate local businesses so they can recover too and become better than ever before.”
Key projects in the borough include Better Queensway, Airport Business Park Southend, high street renewal projects, the housing regeneration pipeline, work with Southend United Football Club and Seaway.
In conclusion, Cllr Gilbert, says: “I am pleased that the government have recently announced an income guarantee scheme which is intended to shield authorities from significant losses, whilst also continuing to encourage authorities to ensure that they maximise income. We are currently awaiting the detailed technical guidance to make a formal assessment of the benefit this will bring and to get a better understanding of the arrangements for claiming.
“I must reiterate that our figures are educated estimates and will be continuously under review so that we can continue to lobby central Government for further financial support.”
The budget shortfall is calculated as follows:
- £12.7m of direct COVID-19 expenditure pressures for 2020/21 and £5m estimated reduction in direct income levels (sales, fees & charges) for the year which equals £17.7m of potential service pressures. We have received £12m of un-ringfenced grant so £5.7m in total.
- In addition to this £5.7m is our loss in income collection from council tax and business rates which is now estimated to be around £4.6m in 2020/21.