Walsall Council could lose £30 million this year, forecasts suggest
Bleak forecasts predict Walsall Council could be millions of pounds in debt in a few months if Government funding pledges are not fulfilled.
Finance bosses told members of the authority’s cabinet they could be looking at additional costs of around £30 million by the end of this financial year as a result of the coronavirus crisis.
They are now urging the Government to fulfil a pledge to recompense local authorities for money spent on work to combat Covid-19.
Deborah Hindson, interim executive director for resources said the council finished the 2019/20 financial year in a healthy position with a £242,000 underspend.
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But beyond June and the end of the first quarter of this financial year, she said the authority could be losing more than £3 million per month.
This is as a result of direct Covid spending and lost income from closed leisure centres, unused car parks and other services impacted by the virus.
Walsall Council’s reserves currently stand at just over £14 million that could be dipped into, but if the end of year £30 million extra costs “worst case scenario” comes true – and no additional Government funding materialises – the authority would have to find more ways to balance the books.
Impact
The forecasted additional costs for the end of June are £9.5 million and Government funding of around £7.5 million will cover the majority of that.
Ms Hindson said: "Whilst we are OK in the very short term, there is a clear impact to the council in terms of the position later in the year.
"We are still required to balance the budget and if we don’t have additional funding that becomes an absolute risk for us.
"Our full-year costs could be in the region of £30 million and our general reserves are around £14 million. So you can see the problem here.
"Our activities are around controlling those costs, balancing the budget and knowing where the costs are.”
Council leader Mike Bird said: "It is important to note that there is still some uncertainty as to whether the Government will reimburse us pound for pound for the extra money we’ve spent.
"That is being pushed to Government by all seven metropolitan borough councils because it is important that we do get 100 per cent return on the amount of money we are paying out."
Councillor Ian Shires, leader of the Walsall liberal democrat group said ongoing austerity measures imposed by the Government had impacted on the local authorities ability to tackle the Covid crisis.
He said: "Without doubt there is every reason to expect the council to be in serious financial difficulties before September.
"Add to this Boris Johnson’s change of direction last weekend when Stay Home became Stay Alert and the PM dropped the return to work bombshell totally out of the blue onto an already stretched local government network, and you can begin to see why there is concern for the financial security of many councils including right here in Walsall."
