Council Faces Covid Funding Crisis As Costs Could Reach £300k Per Week

Eastbourne council will need further government funding in order to cope with the financial impact of the coronavirus pandemic, senior town councillors have heard.

At a virtual meeting on Wednesday (June 3), Eastbourne Borough Council’s cabinet heard how the council “will find it impossible to manage the medium and long-term financial impact of Covid-19 relying solely on its own scarce and limited resources.”

The warning came as part of a report on the initial impact of the pandemic on the council’s finances, in which officers set out how the council faces both rising costs and diminished income as a result of the outbreak.

In a statement released after the meeting, the Liberal Democrat council’s cabinet member for finance Cllr Steve Holt described the situation as “a perfect storm”.

Cllr Holt said:

“The government initially promised us financial back-up for the range of initiatives we implemented in our Covid-19 response to support vulnerable people and our local economy, but the money allocated so far has been woefully inadequate to cover these.

“In addition to massive extra costs, our income is set to drop due to the pandemic. This situation is almost a perfect storm for our finances.

“Our finance team are working diligently to predict the full impact of Covid-19 on our finances. However, like everyone, we simply do not know how long the pandemic will last and therefore ongoing impact on our long term financial plans.

“We continue to emphatically call on government for further financial support to offset the costs related to Covid-19 crisis ​as they originally promised.”

During the meeting cabinet councillors approved the use of council reserves for the continuation of essential services and to mitigate the impact of the Covid-19 emergency on residents.

In the long term, however, the council estimates its additional costs, including delayed savings programmes, arising from Covid-19 could be as high as £300,000 per week, should the lockdown continue and result in a long-term economic downturn.

Even with the £1.6m of emergency funding already received from the government, the report said, the council would be unable to cope in the long term.

There was some criticism, however, from Conservative group finance spokesman Robert Smart, who said the council’s ‘precarious financial situation’ had contributed to the current situation.

He said:

“Let me be clear, the solvency of the council is dependent on additional government funding. However, I want to segregate the issue caused by Covid-19 from the precarious financial position existing before.

“We are very much in the dark about the preceding condition. We still do not have audited accounts from the year ending March 31 2019, 14 months ago. We await delivery figures for last year and we’ve still to receive the budget book for the current year.

“Yes, the solvency of the council now depends on central government support, but let’s be accurate of the precarious nature of the council’s finances before Covid-19 struck.”

Cllr Smart also questioned the accuracy of the council’s levels of reserves, saying the figures reported in meeting papers were based on a ‘heroic savings target’ and ignored any potential impact from the previous year’s audit.

Cllr Smart’s comments drew some criticism from cabinet members during the meeting, with Cllr Holt and cabinet member for direct assistance services Alan Shuttleworth among those to question his comments.

Cllr Shuttleworth said:

“I am a bit surprised at Cllr Smart’s comments at the beginning because in previous meetings he has indicated support for our helping investment strategy that we’ve brought forward, which is a significant part of the budget we’ve brought forward.

“Indeed his party didn’t actually bring forward any alternative at that time.

“Moving on to where we are now, clearly the situation has changed. Eastbourne council along with other seaside councils in particular, have particular challenges.

“As has already been said, we are a business amongst all the other businesses in Eastbourne and part of our business is very much around tourism. We will suffer for that, so it is really important I think that we get our messages through to government.”

By Local Democracy Reporter, Huw Oxburgh

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