County Council faces huge budget deficit without government support
PUBLISHED: 17:00 28 June 2020
Essex County Council faces a huge budget deficit as a result of coronavirus unless the government provides more support.
An investigation by the BBC Shared Data Unit has revealed that the estimated shortfall is forecasted to be as high as £171million – one of the biggest in the country.
The council has seen increased costs from supporting vulnerable people, while its income from fees and rates is falling.
The government has already given £63.6million in funding to the council in two tranches to help cover its costs.
However, this is far short of what is required.
While the council is not expecting to issue an S114 notice – effectively declaring itself bankrupt – it is using its reserves and considering reviewing revenue or capital programmes to tackle the shortfall.
Councillor David Finch, leader of Essex County Council, said: “We have drawn down funding and used our reserves to divert money to the services that need financial support most, and where it can have the biggest impact.
“In the current climate it is extremely challenging for any local authority to model the medium to long term financial impacts of the pandemic.
“The biggest unknown ahead is the impact on council tax and business rates which we rely on for more than 80 per cent of our funding.
“Inevitably the impact on unemployment and the economy will have reverberations on tax nationally and locally.
“We look forward to working closely with government to find positive solutions to this problem whilst we recover Essex’s economy.”
Southend-on-Sea Council says it could also face a shortfall as high as £9.5million, while Thurrock has forecast a deficit of £500,000.
When compared to the population, Essex County Council’s shortfall works out as £115 per head, compared to £52 per person in Southend and £3 per person in Thurrock.
England’s Minister for Local Government, Simon Clarke MP, said: “We’re giving councils an unprecedented package of support, including £3.2 billion non-ringfenced emergency funding, to tackle the pressures they have told us they’re facing.
“This is part of a wider package of support from across government for local communities and businesses – totalling over £27 billion – including grants, business rate relief and for local transport.
“We are working on a comprehensive plan to ensure councils’ financial sustainability over the financial year ahead – we will continue to work closely with them to ensure they are managing their costs and we have a collective understanding of the costs they are facing.”
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