Councils ‘plunging headfirst in black hole of debt’ as extra funding not enough

Councils across Devon have warned the £33m extra from Government still isn’t close enough to plug their funding gaps with ‘a huge black hole of debt emerging and we are plunging headfirst into it’.

Owl notes that Ben Ingham has very little to say compared to the Leaders or Chief Executives of the other District Councils. Has he run out of steam?

Daniel Clark www.devonlive.com 

More than £36m was provided to councils in March by Central Government, and with £33m more awarded in the second tranche of finance handed out.

The additional support will mean councils can continue to provide essential services, such as adult social care and children’s services, while also providing support to people impacted by the coronavirus.

But with income streams for councils having been decimated and increased expenditure as a result of the pandemic, the additional cash will only partly cover the shortfall and only gives them breathing space, rather than any security.

Devon’s district councils were unanimous in stating that the first round of finance was not enough and that the coronavirus crisis and lockdown measures were leaving them facing significant and catastrophic financial pressures unless additional funds were provided by Government.

And while they have welcomed the extra funds in the second round of funding, council chiefs have warned ‘it doesn’t solve the problem’.

DEVON

First round Second round Total
Devon £ 22,516,153.00 £ 14,195,595.00 £ 36,711,748.00
East Devon £ 46,976.00 £ 1,467,105.00 £ 1,514,081.00
Exeter £ 72,737.00 £ 1,306,278.00 £ 1,379,015.00
Mid Devon £ 38,976.00 £ 825,286.00 £ 864,262.00
North Devon £ 52,672.00 £ 965,336.00 £ 1,018,008.00
Plymouth £ 8,464,484.00 £ 7,236,310.00 £ 15,700,794.00
South Hams £ 33,962.00 £ 866,545.00 £ 900,507.00
Teignbridge £ 59,771.00 £ 1,342,148.00 £ 1,401,919.00
Torbay £ 5,371,954.00 £ 3,764,926.00 £ 9,136,880.00
Torridge £ 41,925.00 £ 685,208.00 £ 727,133.00
West Devon £ 29,023.00 £ 555,735.00 £ 584,758.00
TOTAL £ 36,728,633.00 £ 33,210,472.00  

£ 69,939,105.00

 

Cllr Gordon Hook, leader of Teignbridge District Council, said: “Our income streams have simply dried up. Our leisure centres have had to be closed because of social distancing, so absolutely no money coming in. Our car parking income has dropped from an average of £95,000 a week to £2,500 a week. A huge black hole of debt is emerging and we are plunging headfirst into it.”

Teignbridge District Council’s Managing Director Phil Shears added: “We very much welcome this second round of emergency funding to support councils, which is an acknowledgement by the government of the vital support we are providing in responding to this emergency, as well as the immense and immediate pressure district councils are under. Our latest settlement of £1,342,148 combined with the initial grant of £59,771 takes our cumulative sum to just over £1.4m.

“This latest funding package is welcome and gives us just short of another couple of months’ breathing space, but it will not allow us to recoup the significant financial loss of income as a direct result of the lockdown.

“Devon’s district councils will continue to work together to press the government for an assurance about how it will help district councils with this financial plight – as has been promised. The sooner we know the details of this, the sooner we can start to plan for the future with a degree of financial confidence.”

Chief Executive of Mid Devon District Council, Stephen Walford, added: “We are grateful that the Ministry seems to have more clearly recognised the pressures on districts in the short-term. However, this takes the total funding announced nationally to £3.2bn, when the current estimates of the total cost to councils are around £10bn.

“This latest funding package is welcome and gives councils some time to breathe, but it doesn’t solve the problem and we will continue to press for a comprehensive undertaking from government on how funds will be made available to fully support councils – as has been promised. The sooner we know the details of this, the sooner we can start to plan for the future with a degree of financial confidence.”

North Devon Council’s chief executive Ken Miles said that the £1m that they have received will only last around a month and isn’t enough to keep the council afloat in the longer term.

He said: “Although North Devon Council welcomes this funding from the government, it’s a cautious welcome. In reality, it will last us around a month as current projections show that we could have up to a £3 million budget shortfall over the first three months of the pandemic. This is due to increasing costs from supporting our local community, particularly our most vulnerable residents and a reduction in income from things like car parks and planning fees.

“We’re pleased the government has recognised the importance of district councils by offering a bigger slice of this second round of funding, but we need them to recognise that it isn’t enough to keep us afloat in the longer term and that further funding will be needed.”

In the South Hams, Cllr Judy Pearce, Leader of South Hams District Council, said she welcomed the £866,545 from the second tranche of the COVID-19 funding, but it was only about a sixth of what was needed.

She said: “This will assist the Council to partly meet its projected loss of income streams such as car parking income and planning income, but it will only be part of the solution. Just the loss of income from car parking, some business unit rentals, harbour fees, and the Dartmouth Ferry income will be very significant. The Council’s estimate is that we could see a reduction in income and increased expenditure totalling over £6 million in 2020/21.

“While the funding is much appreciated, it is less than one sixth of what we estimate we might need. The allocation of funding to Councils has been made partly based on population and as a rural Council we are always going to miss out on this basis. We will continue to lobby the Government so that we receive the appropriate level of funding to be able to plan confidently for the future.”

Cllr Neil Jory, Leader of West Devon Borough Council, said he was disappointed with the level of funding they received which was one of the lowest of any council, getting just £555,735.

“While this is most welcomed, we are disappointed that we are one of the few District Councils whose allocation of the funding is less than £1 million,” Cllr Jory said. “The funding has been allocated partly based on population and in a sparsely populated area such as West Devon, we are always going to lose out on funding based on our population. We will continue to lobby our MPs going forward for a more sustainable funding package.

“The amount received will only partly cover our income shortfalls and increased costs which are projected to be £2.6 million for 2020/21. Therefore we hope there will be future funding packages for Councils to fully compensate us for our loss of funding streams. The Council is working quickly to deliver lifelines to local businesses and has now paid out £12.6 million of Government grant funding to 1,070 businesses.”

Cllr Ken James, Leader of Torridge District Council said while they were grateful that the latest grant package from Government has increased the financial support to Torridge from £42,000 to £685,000, it was less than a third of what they needed to balance the books.

He said: “While the sums may seem large, the Councils current financial situation has been impacted both by a fall in income and increased costs in ensuring services are maintained and enhanced elsewhere for the vulnerable. Our current estimate is a shortfall of around £2.5 Million for the 2020/21 financial year which is likely to grow should the crisis persist.

“To put this into further context the shortfall estimated to date equates to around £38 for every resident in Torridge. The package from government announced so far is around £11 per resident or 29 per cent of this figure, less than a third of the money we already need to balance the books.

Therefore while we very much welcome the funding provided we sincerely hope that it will be part of an ongoing package of support as this will certainly be needed by all Councils up and down the Country and not just here in Torridge.”

East Devon District Council’s Leader, Cllr Ben Ingham, added: “While the grant is very welcome it is one piece of the jigsaw in adapting the council to the much changed financial circumstances and we are assessing the matter and will be debating how we respond to these changed circumstances.”

Posting on Twitter, Karime Hassan, Chief Executive and Growth Director of Exeter City Council, added that the amount Exeter has received was roughly the amount of income the council has lost to date because of the lockdown.

The first round of funding saw the majority of the cash handed to the top tier authorities, with £35m of the £36.7m handed to Devon, Torbay and Plymouth councils, but the second tranche has seen the eight district council handed a larger slice totalling nearly £8m.

Communities and Local Government Secretary Robert Jenrick said: “Councils are playing a central role in our national fight against coronavirus and the Government continues to back them at this challenging time.

10 Downing Street handout photo of Housing, Communities and Local Government Secretary Robert Jenrick answering questions from the media via a video link during a media briefing in Downing Street, London, on coronavirus (COVID-19).

“That’s why I announced an extra £3.2billion of support for councils to help them to continue their extraordinary efforts.

“Today I’m setting out how the latest £1.6billion of this will be allocated to councils in the fairest way possible, recognising the latest and best assessment of the pressures they face.

“We are backing local district councils and a clear majority will receive at least £1million in additional funding.”

The announcement builds on other government measures, including allowing councils to defer the payment of business rates to central government and providing them with a combined £850million in up-front social care grants that will help with their cashflow so they can continue to deliver vital services.

 

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