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Covid-19's impact on council budgets

Release date: 
Tuesday, 30 June, 2020

Councillors are set to discuss a report on the potential financial impact the coronavirus pandemic is having on Burnley Council’s budgets.

The council is looking at a projected deficit of £3.4 million, around a quarter of its total annual budget, over the current financial year due to increased spending and loss of income as a result of the virus.

The report by the head of finance, Asad Mushtaq, says that the council’s reserves are not enough to meet the current funding shortfall and that further significant Government support is needed.

The longer the current crisis last, the greater the impact will be. The reports also warns that the impact of cornavirus on budgets will probably be felt for several years.

Councillor Margaret Lishman, the council’s executive member for resources and performance management, said: “We’re grateful for the Government funding we’ve received so far but it’s clear we need significantly more support if we are to balance our books.

“We are faced with the double whammy of extra spending and falling income. Council budgets have been under pressure for many years but we now face a financial challenge, the scale of which we’ve never seen before.

“We are keeping the Government informed of our financial position so that it has a clear picture of the support we need to maintain essential services and to successfully manage our way out of this crisis as our borough’s recovery takes shape.

“These are unprecedented times. It isn’t just the council that has been hit hard. We recognise that the coronavirus pandemic has also badly affected the finances of our residents and businesses who have also, in many cases, needed financial assistance.

“The council leader has met with our MP and we will continue to press for Government support for our borough and its residents.”

The issue is a national one, with councils across the country warning of the severe financial challenges they face. The Local Government Association, which represents councils nationally, is lobbying the Government for more support. The LGA said councils could need as much as £6 billion more in the current financial year to cover the costs of coping with the pandemic.

Burnley Council has played a leading role during the crisis including distributing business support grants to local firms, supporting the Burnley Together community hub to help local individuals and families in need, increasing provision for the homeless to get them off the streets and into accommodation, and providing advice and support to shops to allow them to open safely and follow social distancing guidelines.

The council’s executive is set to recommend to a meeting of the full council that:

· The financial impact is modelled and updated regularly so that action plans can be drawn up

· Managers continue to draw up options to reduce the potential financial impact

· The council, and other local authorities and partners, continue to lobby Government for extra funding

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