Council will have to make spending cuts, as cost of Covid-19 passes £100 million

Bristol City Council has repeatedly called for more funding from central government, because the current level of support leaves a black hole of £86 million.

Reports 3rd June, 2020

Amanda Cameron (Local Democracy Reporter)

Photo: Álvaro Martínez García

Bristol City Council says it will be forced to make cuts next year because of a large and growing hole in its budget caused by the coronavirus pandemic.

The local authority called for a government bailout last month, warning that a “catastrophic” blackhole of £82million forecast this year would threaten frontline services.

Now that estimate has ballooned to £86million and the council is taking steps to plan for cuts next year.

The local authority expects to rely mostly on reserves and borrowing to get through this financial year, but cuts in the 2021/22 financial year are “inevitable”, scrutiny councillors heard on Monday.

The Covid-19 crisis will have cost the local authority a total of £112million by the end of this year, according to its latest assessment.

But it has received just £26.9million in government funding to cope with the crisis, leaving a “total net impact” of £86million, members of the overview and scrutiny committee heard.

Councillor Stephen Clarke, who chairs a task group set up to scrutinise the council’s budget and finances, said the shortfall is only partly due to the cost of responding to the pandemic.

A “good chunk” of these expenses – which include extra costs for personal protective equipment, accommodation for homeless people, social care, and waste and recycling – has already been paid for by government funding.

But the council continues to lose vital income from council tax, business rates, parking and service fees, rents and commercial investments as a result of the pandemic.

The council’s finance director, Denise Murray, warned that some of those losses will continue into 2021/22 and that “cashflow and liquidity is a concern”. 

She said: “Some areas will not recover to the degree initially anticipated.

“There will be an ongoing stream of income losses that we’ll need to start to think about in terms of our approach to addressing that in the longer term.” 

“The overall strategy is to try not to have too many cuts this year, to utilise reserves and borrowing from the Public Works Loans Board, but next year is more of a problem.”

Many decisions would be needed and councillors must be involved in making them, especially around “how the prioritisation is going to be made for the cuts that are inevitably going to come”, he said.

Council chief executive Mike Jackson said: “We expect most of the impact to be medium term so we’re assuming that we’ll be remodelling our service and business plans as part of the annual budget planning process.”

He assured members of the scrutiny committee that the council’s proposals would be brought before the committee, cabinet and full council before they were signed off.

Murray said the council was among 27 of 312 authorities that had received “minimal cashflow support” from the government because they were part of a combined authority.

“Cashflow and liquidity is a concern and one that we’re keeping very closely under review and scrutiny,” she said. She added that local authorities in the region were working to provide each other with cashflow support if necessary.