Michael Burton 18 August 2020

Councils facing £2bn budget black hole

Councils face a budget black hole of £2bn this year due to unfunded coronavirus costs, a new study has found.

The report from the Institute for Fiscal Studies (IFS) said that while loss of income and council tax coupled with extra spending came to £7.2bn, the Government has so far promised only £5.2bn or 4% of councils’ pre-crisis spending.

Although many councils have reserves, drawing on them to plug the coronavirus deficit would leave them exposed.

The IFS instead proposed targeted extra government grant funding for the councils most in need and a relaxation of borrowing rules.

Local government policy manager at the Chartered Institute of Public Finance and Accountancy (CIPFA), Joanne Pitt, said the IFS’ relaxation suggestion would ‘directly contradict’ the existing prudential code, under which local authorities are only allowed to borrow for long-term capital investment.

She added: ‘'While short-term solutions may be attractive, CIPFA believes that this is the time to strengthen good financial management, not weaken it.’

A government spokeswoman said: ‘We’re giving councils unprecedented support during the pandemic to tackle the pressures they have told us they’re facing. This includes £4.3bn funding, compensation for irrecoverable income losses and a scheme allowing them to spread their tax deficits.’

Photo: Loveandrock / Shutterstock.com

SIGN UP
For your free daily news bulletin
Highways jobs

Family Support Worker

Durham County Council
Grade 6 - £27,269 - £30,060 (Pay award pending)
Do you have a real passion for helping families to make positive changes for themselves and their children? This might be the right role for you!   WH Durham
Recuriter: Durham County Council

Clerical Officer Receptionist

Durham County Council
Grade 3 £24,404 - £25,183 Pro Rata to hours worked Pay award pending
WHAT IS INVOLVED? We are looking to appoint a part time Clerical officer/Receptionist within Business Services to provide a professional, effective a Durham
Recuriter: Durham County Council

Administration Assistant

Durham County Council
£25,584 - £27,711 pro rata
Administration Assistant Grade 5    £25,584 - £27,711 pro rata Temporary – required from 1st October 2025 until 31 December 2025 37 hours per week, Te Consett
Recuriter: Durham County Council

Support Assistant

Durham County Council
£24,027 pro rata
Support Assistant Grade 1 £24,027 pro rata Temporary – required from 1st October 2025 until 31st October 2026 Part Time, 32.5 hours Mon - Fri 9am -4pm Consett
Recuriter: Durham County Council

Lecturer in Foundation Learning -Maths, English and Digital

Durham County Council
Grade 9 £34,314 - £37,938 pro rata for part-time term time working PAY AWARD PENDING
The DurhamLearn Foundation Learning programme area delivers Digital Skills, English and Maths Functional Skills.   An opportunity has arisen for a Lec Durham
Recuriter: Durham County Council
Linkedin Banner