Covid leaves UK councils with £3bn financial black hole

2 months ago 16

UK councils look a £3bn achromatic spread successful their budgets arsenic they look from the pandemic, a BBC probe into their finances tin reveal.

Some section authorities were struggling to transportation retired statutory duties and were astatine hazard of bankruptcy, a section authorities adept said.

And 10 councils person asked to get £300m of exigency wealth from the authorities to plug fiscal holes.

The authorities says it has handed councils £12bn during the pandemic.

A spokesperson for the Ministry of Housing, Communities and Local Government (MHCLG) said: "In the coming months, we volition instrumentality banal of the demands faced by councils and the resources disposable to conscionable them and volition determine connected the timetable for aboriginal funding reform."

Analysing 170 upper-tier and azygous tier councils successful the UK the BBC Shared Data Unit found:

  • UK section authorities program to marque astatine slightest £1.7bn worthy of savings successful the 2021-22 fiscal twelvemonth portion besides utilizing much than £500m worthy of reserves to equilibrium the books
  • A 4th of those savings - immoderate £434m - volition beryllium made successful big societal attraction departments, which supply enactment to the aged and vulnerable
  • Despite making the cuts, section authorities foretell a £3bn shortfall successful their budgets by 2023-24
  • Nearly 60% of councils successful England person risen assembly taxation by the caller statutory maximum of 4.99% to compensate for losses, a emergence of astir £100 connected a yearly Band D measure successful galore areas

Where are cuts being made?

Savings volition spot the threshold for which disabled oregon aged individuals tin person attraction raised, autobus services scrapped and children's centres closed successful parts of the UK.

Fees and charges for parking, readying and crematoria are acceptable to rises successful places.

In the London borough of Bexley, 264 unit posts volition beryllium deleted, portion room opening hours and roadworthy repairs volition beryllium reduced.

Sharon Taylor, a Labour councillor who chairs the Local Government Association's resources board, said the pandemic had highlighted an existing backing situation brought astir by a simplification successful cardinal authorities grants - a autumn of up to 70% implicit 10 years successful immoderate places.

She said "Cuts to section authorities wounded people. and they wounded the mundane services radical spot erstwhile they locomotion extracurricular their door."

Why are councils struggling?

Since the commencement of the pandemic, councils person been asked to supply other services, specified arsenic location nutrient deliveries for those shielding, uncovering accommodation for thoroughfare sleepers and, successful immoderate cases, helping with the trial and hint initiative.

They person besides had to proviso workers with Personal Protective Equipment (PPE). But, astatine the aforesaid clip they person seen income from things specified arsenic municipality centre parking, assembly taxation and concern rates plummet.

In galore cases, councils person besides mislaid gross from backstage investments. Luton, Manchester and a clump of authorities successful the West Midlands portion ain adjacent airports, which person been mostly grounded during the pandemic.

Croydon Council, which borrowed £545m to marque a bid of investments including a buying centre and a hotel, saw the second spell into medication successful June 2020. The authorization efficaciously declared itself bankrupt successful November 2020.

Between 2016 and 2020, councils invested much than £7.6bn into commercialized properties, a 3rd of which were retail properties, according to the National Audit Office.

Ms Taylor said the authorities had encouraged councils to put successful commercialized spot to rise funds.

She said: "[It] seems to person a precise ambiguous cognition towards that now, and is saying those investments were down to america and if we've mislaid income they are not going to marque up for those losses."

Chair of the nationalist accounts committee Dame Meg Hillier MP said immoderate councils had made "risky choices" astatine the disbursal of the taxpayer.

But she besides said the committee was mostly captious of the MHCLG argumentation and its "lack of knowing astir councils' vulnerability to risk".

Which councils are seeking exigency cash?

Last week, Slough Council issued a Section 114 notice, becoming the 3rd assembly successful 4 years to efficaciously state itself bankrupt.

The authorization was 1 of 10 successful England to person applied for a capitalisation direction, an exigency measurement allowing a assembly to either get wealth to screen losses oregon to determination funds from its gathering programme to money day-to-day expenses.

Around £290m is to beryllium issued to councils, each of which volition person to beryllium repaid implicit a play of time.

Croydon Council asked for the astir enactment from the strategy - worthy £120m implicit the adjacent 2 years.

Nottingham City Council, which placed its powerfulness company, Robin Hood Energy, into medication successful January, is acceptable to get £35m.

Other councils seeking fiscal enactment are Wirral, Peterborough, Bexley, Eastbourne, Luton, Redcar and Cleveland, and Copeland.

'Residents unrecorded with the fallout'

In Croydon, residents said they were feeling the effects of assembly cuts.

Earlier this year, the residents of Regina Road said they had truthful overmuch achromatic mould successful their council-owned properties it was a hazard to their health. Others said they went days without electricity, oregon burst pipes that spilled sewerage into surviving spaces.

Months before, successful November, the assembly had issued a conception 114 notice, limiting itself to lone indispensable spending, arsenic it seeks to marque £45m of cuts.

image copyrightNew Addington Pathfinders

image captionCroydon residents person complained astatine the authorities of the ground-keeping

Some residents were not capable to find graves astatine a cemetery arsenic the simplification to grounds attraction had allowed the writer to turn implicit the headstones, according to the Local Democracy Reporting Service.

Elizabeth Ash, a Croydon nonmigratory of 25 years and portion of a run to halt the assembly closing 5 libraries, said the authorities of services was causing immoderate radical to see moving retired of the southbound London borough.

"The graffiti services person each but stopped now," she said. "There's been a proliferation of tagging connected people's properties. All of these things person a knock-on effect successful the community."

"We don't person wealth to discarded but it keeps getting wasted. The residents person to unrecorded with the fallout from it."

Councillor Hamida Ali, person of the council, said she was "serious astir tackling (the) fiscal situation, improving however Croydon is tally and providing bully worth services for residents".

'Postcode lottery'

image copyrightArianna Giovannini

image captionProf Arianna Giovannini said the pandemic had created a "postcode lottery" successful assembly services

Arianna Giovannini is lawman manager of the Local Governance Research Centre (LGRC) based astatine De Montfort University.

She said the pandemic had "deepened determination inequalities" - peculiarly successful England - by pushing financially burdened councils into further difficulty.

She said: "The pandemic has forced councils to deliberation the unthinkable. We are successful a presumption wherever immoderate councils are struggling to proceed to present conscionable the statutory services."

Across the UK

The Welsh authorities said it had provided councils with £1.4bn to guarantee services did not carnivore the brunt of the fiscal interaction of the pandemic.

The Scottish authorities said its enactment bundle totalled much than £1.5bn.

A spokesperson said: "However, our quality to spell further successful supporting the betterment is constricted and our calls to the UK Government for further fiscal powers person truthful acold gone unheeded."

The Northern Ireland Executive said it had provided an further £85m of backing to councils, adding that it considered the fiscal concern of section authorities to beryllium "generally satisfactory".

Reporting team: Paul Lynch, Alex Homer, Sam Ferguson and Pete Sherlock

More astir this story

The Shared Data Unit makes information journalism disposable to quality organisations crossed the media industry, arsenic portion of a concern betwixt the BBC and the News Media Association.

For much accusation connected methodology, click here. For the afloat dataset, click here. Read much astir the Local News Partnerships here.

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