Michael Burton 18 August 2020

Councils facing £2bn budget black hole

Councils facing £2bn budget black hole image

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

The LATCo model image

The LATCo model

Mark Scott explains how local authorities can deliver profit with a purpose.
SIGN UP
For your free daily news bulletin
Highways jobs

SEND Operations Assistant

Essex County Council
Up to £12.02 per hour
The SEND Operations Assistant provides administration and support to the statutory SEND processes such as the Annual Review Process, in particular at phase transfer, as well as providing a triage service for all contacts received by the SEND Operations Te England, Essex, Harlow
Recuriter: Essex County Council

Relief Resource Centre Worker - Nidderdale Children's Resource Centre - Award Winning Team

North Yorkshire County Council
£20,493
The role of Relief Resource Centre Worker is invaluable, rewarding, complex and challenging; you will play an... Harrogate, North Yorkshire
Recuriter: North Yorkshire County Council

Specialist Teacher

Birmingham City Council
Main/ Upper Pay Scale + up to full SEN Allowance
This exciting opportunity will be to join a well-established team supporting children and young people with communication and... Birmingham, West Midlands
Recuriter: Birmingham City Council

People Analytics / Workforce Planning Lead

Essex County Council
Negotiable
Job Purpose This role will be responsible for carrying out data extraction, manipulation, research, analysis, and interpretation of data to provide me England, Essex, Chelmsford
Recuriter: Essex County Council

Building Surveyor

Royal Borough of Greenwich
£39774 - £42684 per annum + Essential Car Allowance
Hi All, I'm currently recruiting for this position. Please click on the job title below to view the Job Description and apply to it! England, London, Woolwich
Recuriter: Royal Borough of Greenwich

Public Property

Latest issue - Public Property News

This issue of Public Property examines how how flexible workspaces can lead the way in regeneration for local authorities, Why local authority intervention is key to successful urban regeneration schemes and if the Government’s challenge of embracing beauty is an opportunity for communities.

The March issue also takes a closer look at Blackburn with Darwen Council's first digital health hub to help people gain control over health and care services.

Register for your free digital issue