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The financial impact of coronavirus on Southend Council could lead to services being cut and jobs lost if the government does not reimburse costs, a leading councillor has warned.
Southend’s deputy leader, Councillor Ron Woodley, explained the government has so far only been issuing one-off grants to make up for the financial impact of Covid-19, adding that lost revenue from parking has already cost close to £7million.
But the grants are not guaranteed and the government is yet to commit to picking up the bill for all the money spent – a commitment that Mr Woodley said is vital not just for Southend but for all councils across the country.
“We could absolutely have cuts to services and there could also be cuts to staff if we haven’t got the funding,” said Mr Woodley.
“In theory a council could go bankrupt but I don’t think that is likely to happen as the government would step in, they can’t allow that.
“Councils are like businesses and they can go bankrupt if their expenditure exceeds their revenue.
“Our lost revenue from parking is currently close to £7million. It is that kind of revenue shortfall that we feed back to them, and I expect the government to compensate us for all revenue shortfalls.”
The government has told councils that funding grants can be used as they see fit in order to address where there is most demand and nationwide it has given more than £3billion.
The latest boost to Southend was for £5,062,493 and this will be used to address pressures on social care. However, Mr Woodley said while the money is welcome it is “unlikely to cover all the costs and loss of income we are seeing and will continue to see in the weeks and months ahead”.
Work is underway to understand just how damaging the virus has been to the council’s finances but they expect significant losses due to the fall in income from parking, leisure facilities and tourism.
In the same round of funding, Basildon Council was awarded a grant of £1.8million which council leader Councillor Gavin Callaghan said “plugs a gap of around 50 per cent of the money we have spent already on coronavirus”.
He explained that Basildon has received around £1.9million in total but has spent nearer to £4million.
“There is still a long way to go between what central government is giving councils and what we are spending and losing in income,” Mr Callaghan continued.
“To put this in some form of context, it is welcome that the government is giving us some money but we need to go a lot further. The council here in Basildon, Essex County Council, every council in the country, we are running at significant gaps in our finances as a result of coronavirus.”
The council’s deputy leader, Councillor Kerry Smith, called the government the council’s only lifeline for financial support.
He said: “This is a national situation. The government has placed a two per cent cap on council tax increases so we can’t raise it even if we needed to.
“Our only lifeline is the government and they have said they will do whatever it takes, I expect them to do that.”
The Local Government Association (LGA), which represents councils across England is urging the government to make the commitment to fund all costs of Covid-19.
“Many councils are facing increased cost and demand pressures at the same time as seeing a significant drop in income. This is unsustainable and pushing councils towards financial failure,” said Richard Watts, chair of the LGA’s resources board.
“It would be wrong and unacceptable if councils are then forced to make further cutbacks to the very services that will have helped the nation through this crisis and the key workers who are producing heroics on the frontline see their jobs placed at risk.”