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City council calls on government for more funding to deal with Covid pressures

Published on Tuesday, 1st September 2020

A report detailing the impact of Covid-19 on the council’s budget will be discussed at a cabinet meeting on Wednesday 9 September.

The budget monitoring report – which sets out the budget position for quarter one of the current financial year (April – June) – shows that, despite an extensive process to identify savings this year, the council still faces a significant overspend due to the financial pressure of dealing with the pandemic. This comes despite additional funding from government.

The current forecast overspend of £1.3m – down from a £7m forecast overspend in June – will need to be met from the council’s reserves. With the impact of Covid likely to continue into next year and demand on local services going up, the pressure on council finances will remain.

The report shows how increased spending costs on issues such as housing rough sleepers, providing food for vulnerable people, and enabling council staff to work efficiently from home – combined with a loss of income from sources such as car parks, commercial rents and events – have all contributed to the current financial situation.

The council has responded by identifying in-year savings of over £3m to reduce the overall budget impact. This has been achieved through detailed reviews of internal spending.

However, despite the extra measures taken to find savings and additional money from government, the council’s general fund revenue budget is currently forecast to overspend by £1.3m.

Leader of the council, Councillor Alan Waters, said: “At the start of the pandemic, government ministers made it clear to all council leaders that they would fully compensate local government for the financial impacts of Covid. We were assured that we could focus on supporting our residents without having to worry about making cuts.

“Yet, despite these assurances, here we are five months on, having to take £3m out of council budgets and still facing an overspend. 

“The fact that we have been able to find this level of savings in year – while protecting front line services – is testament to the innovative ways we’ve been able to rapidly adapt services and effectively manage council finances.

“We are also grateful to our residents who have continued to pay their council tax and business rates – these payments are essential to fund essential local services.

“However, Covid-19 is still with us and the pressure on our finances – and that of the wider sector – remains. Indeed, some councils have publicly stated that if they don’t receive more money soon, they will effectively have to declare themselves bankrupt. 

“Thankfully, because of the way we’ve managed our budgets through a decade of austerity, Norwich is not in that position. However, I’m calling on the government to make good their pledge and provide further funding to all councils to see them through the challenging times ahead”.