Council blames pandemic and war for £15m hole in budget

An East London council has blamed the aftermath of Covid-19 and the ongoing Ukraine war for a £15m hole in its budget.

Barking and Dagenham Council has predicted its general fund budget will go from £183m to £198m because of an economic climate it says has “progressively worsened” throughout 2022/23.

The local authority says the £15m overspend, which was recorded at the end of November 2022 is “largely outside the control of the council” and warned there could be even more financially turbulent times ahead.

Council officers said: “The council, as with the rest of the country, has experienced significant inflationary pressures, which have impacted not only the local government pay award but also the economic arena of service delivery as well, acutely in social services where market forces are inflating the cost and availability of placements.

“Energy costs have also increased for the council. The cost of living crisis has resulted in increased demand. This is against a backdrop of the fallout of the pandemic and the resource implications of Brexit.”

Council officers said central government had not handed any extra money over to fund these costs, which had placed a “burden” on the council. They added that the aftermath of Covid-19 and the Ukraine war also played a toll on the council’s rising costs.

They also said: “The unique situation of the aftermath of Covid-19 combined with the hostilities between the Russian Federation and the Ukraine presents the prospect of the need to purchase supplies and services with heavy competition for the same resources together with logistic challenges which is causing scarcity and inflationary rising costs.”

As a result the council is planning to increase its council tax by 3pc and a further 2pc precept for social care but is currently consulting with residents over the potential hike. Residents can leave their feedback about the 2023/24 budget here.

The report will be discussed during the council’s cabinet meeting next Tuesday (January 17).

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Ruby Gregory

Local Democracy Reporter