Cuts warning as coronavirus bites in South Tyneside - council says it faces great challenges without further Government cash

Plummeting income from council tax, rents and other fees, combined with rising costs, have left many councils facing holes in their spending plans due to the impact of COVID-19.

And although South Tyneside Council have been allocated an extra £10.3million by ministers since the crisis began, bosses still expect to be left facing a shortfall.

According to a council update on its finances: “Without additional government funding in the short and medium term over and above sums provided to support the place-based recovery financial pressures we are facing, together with a sustainable medium to long term financial settlement, it will be very challenging to sustain current services.

“At the moment the council remains financially resilient and no emergency changes to our budget are planned.

“As at the end of the last financial year for which accounts have been audited, the council held £21million in accessible reserves which is necessary to manage financial risk.”

In a statement, the council added it ‘constantly’ reviewed its spending plans, but conceded coronavirus had ‘undoubtedly’ affected local authority finances.

Finance chiefs also said it was ‘too early’ in the financial year to assess the full impact of the virus.

Early in the COVID-19 outbreak, the government announced a £1.6billion fund to help councils deal with the effects of the virus, which saw South Tyneside handed about £6.2million.

But a under second stage of the scheme, which saw the fund’s total value double to £3.2billion, the borough was allocated just £4.1million.

There have been concerns across the country that a policy of austerity will return as the Government works to balance the books after the coronavirus crisis.

But Chancellor Rishi Sunak is among those who have rejected such suggestions. In May, he told Parliament that the government’s “levelling-up” agenda – aimed at raising the prospects of less wealthy areas such as those in the North East – would take priority.

“Indeed I believe this can still be a critical part of how we get back to normal,” he said.

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