Council working to balance budget during Covid-19 crisis

Published Thursday 2 July 2020 at 13:59

A report detailing the Council’s finances is set to be discussed at the Executive Board meeting on Thursday, July 9th.

The major financial effects of the impact of the coronavirus are laid out in the report, including the extra spending needed in response to the crisis across the borough.

There has also been a significant loss of income due to the stopping or reduction in the Council’s various income generating activities, and the impact on Council Tax and Business Rates as a consequence of the economic downturn.

Despite emergency Covid-19 funding from the Government, the Council is currently looking at a shortfall in finances due to the massive effect responding to the virus is having on the Council’s budget and reserves.

Based on the financial forecast, in 2020/2021, the ability to deliver the budget will almost certainly depend on further funding from the Government but specific impacts will not be clear until the wider economic situation is known.

To date, Government have announced two rounds of emergency COVID-19 grant funding to Local Government amounting to £3.2 billion overall, of which Blackburn with Darwen received £9.297 million. Further funding to assist with Councils’ income losses has now been announced by the Government but full details are awaited.

The Council was also awarded £2.2 million from the £500 million Hardship Grant funding to provide further Council Tax relief for vulnerable residents and we have also claimed £0.016 million for costs from the £3.2 million fund to support housing rough sleepers.

Other funding includes:

  • Business Rate Relief, of which BwD has received £16.3 million;
  • Business Rate Grant support for Small Businesses as well as the Leisure, Hospitality and Leisure sectors, of which the BwD allocation is £46.4 million;
  • Support to those businesses with ongoing premises costs but who have not met the criteria to qualify for funding through the Government’s Business Rates Grants – this is a Discretionary Scheme and each individual council is required to establish their own, individual scheme – of this BwD has received £2.2 million, and finally,
  • Care Home Infection Control funding of which BwD has been allocated £1.4 million

Further funding available to BwD has included;

  • £0.131 million of the £50 million fund to support the re-opening of High Streets safely, this grant will be claimed from Government, in arrears, based on actual expenditure incurred
  • £0.385 million through the £225 million emergency active travel fund, comprising both revenue and capital funding.
  • £1.4 million of the £300 million additional funding for local authorities to support the new Test and Trace service.  

The latest COVID-19 Financial Management Return was submitted to Ministry of Housing, Communities and Local Government (MHCLG) in June and indicated a forecast financial gap for 2020/21 of £19.5 million.

The Council currently has £15.5m in available reserves.

However, some positive budget changes could be available that can help in offsetting the additional costs and loss of income, such as a reduction in recruitment, and certain costs avoided as activities or services have been reduced or stopped due to the pandemic.

Denise Park, Chief Executive of Blackburn with Darwen Council, said:

The COVID-19 pandemic has created a significant shock to the economy, to put it mildly, and has led to unplanned spending and income losses. This has obviously had a massive effect on the Council’s budget and this is an ongoing situation.

A huge amount of money has been deployed to battle the effects of the coronavirus pandemic on the town and the needs and wellbeing of all our residents is, as ever, our biggest priority.

Councils across Lancashire, including Blackburn with Darwen, have lobbied the Government hard and have now heard that some desperately needed further funding will be provided which is promising news. We are awaiting further guidance on this however it seems clear that it will not cover the full shortfall.”

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