Council leader warns of coronavirus financial impact
Income from council commercial ventures has “dried up” during the pandemic putting services that were already “underfunded” under more pressure, the local authority’s leader has said.
Shaun Davies, who heads Telford and Wrekin’s Labour administration, said central government has told councils to “stop relying on grants” and “go out there and raise your own income” for a decade, but the coronavirus crisis triggered a “double-whammy” of budget cuts and reduced custom.
Conservative opposition leader Andrew Eade praised the speed and generosity of government support, and said the fact that the council didn’t have to dip into its unallocated reserves during 2019-20 was evidence of this.
They were speaking during the cabinet’s first online meeting, where finance portfolio holder Rae Evans presented the end-of-year financial report.
Cllr Evans said: “We started 2019-20 with a budget that was already under pressure after 10 years of national austerity which has seen the council deliver £123,000,000 ongoing annual budget savings in the light of significant cuts to government grants.
“But, at the same time, demand for services such as adult social care and children’s safeguarding has been increasing.
“In addition, in February, we had the storm damage and serious flooding and in March the pandemic started.
“Despite all of these challenges, the council has continued to demonstrate robust financial management and ended the year in a positive position.”
The report, by Chief Financial Officer Ken Clarke, said the council “has not had to make any unplanned use of reserves in 2019-20 and has retained a prudent level of balances set aside”.
Cllr Eade said the fact that the reserves were unused was “something of a testament to the unparalleled financial support given to the local authority and this community by this government”.
He added: “The furloughing scheme was announced very quickly, and support to businesses has been very good.”
Cllr Davies said: “There is a £19,000,000 in-year black hole in this council’s finances. That is in line with every other council. The Conservative-led Local Government Association puts the figure nationally at £10,000,000,000 so I’m surprised not to hear more support in getting the government to close that.
“If it isn’t closed this financial year, that will see more council tax rises and more service reductions that will put people’s lives and livelihoods at risk.
“I also think it’s a bit of a shame, really, that the government, over the past 10 years has told councils to stop relying on government grants. ‘Go out there and raise your own income’.
“Well, we did that, through [council-owned housing provider] NuPlace, leisure and other initiatives, and because of this pandemic that income has dried up. Now, therefore, we have a double-whammy. Underfunding, historically, before this pandemic, on things like adult social care and safeguarding, then the pandemic and increased costs, then the lost income.”
Mr Clarke also wrote that there were overspends of £3,700,000 and £2,600,000 in children’s safeguarding and adult social care respectively in 2019-20.
Cost improvement plans are in place in both areas, and the social care overspend was offset by “additional income totalling £1,700,000 from CCG funding, client contributions and underspends elsewhere in the service”, he wrote.
Cllr Eade said: “Social care over-expenditure from initial budget calculations continues on its merry way, unabated.
“We should be realistic around costs, which should be reflected in future budget predictions, and not this ongoing charade of overspends. We have to be realistic of what it’s actually going to cost us.”
Liberal Democrat leader Bill Tomlinson said: “We need greater certainty from the government so local authorities can plan. The pandemic, if it’s shown nothing else, has shown the vital role local authorities have in supporting the most vulnerable.
“The two largest parts are looking after children and looking after adults. The costs, up and down the country, have grown and it’s almost beyond local authorities’ means to funds those on the council tax we get. It needs government investment if we’re going to properly support those people.
“There are local authorities – not ours, thankfully – that are teetering on the edge.”
