South Tyneside services under pressure as pandemic leaves £3million hole in budget

South Tyneside Council is facing cost pressures of nearly £3million as a result of demand on services and lost income during the Covid-19 pandemic.

By Chris Binding
Friday, 9th October 2020, 8:56 am
Councillor Ed Malcolm
Councillor Ed Malcolm

New revenue budget projections for the 2020/21 financial year were revealed in a report presented to council chiefs.

The estimate takes into account financial implications of coronavirus and additional funding received from the Government.

“Monitoring our spend against budget on a regular basis is integral to effective financial management to ensure that we keep spending within our resources,” said Cllr Ed Malcolm, cabinet member for resources and innovation.

“And where we forecast this is not the case, then we have the opportunity to address it.”

The comments came during a meeting of the borough’s ruling cabinet, which was held via videolink and broadcast on YouTube.

The forecasted cost pressure for 2020/21 is based on net spending between April and June.

By the end of the financial year, chiefs are predicting a £2.786million pressure on revenue spending, which covers day-to-day services.

The report adds there have been “significant pressures” relating mainly to the effects of Covid-19 from lost income as well as additional expenditure and pressures around public health and area management.

Cllr Malcolm added: “All spend will continue to be closely monitored during the rest of the financial year as the longer term financial impacts of Covid-19 become clearer.”

According to the budget monitoring report, the general fund capital programme is facing cost pressures of £1.412million in 2020/21.

Council bosses say this will be met by “planned reprofiling of the existing [capital] programme.”

Meanwhile, the housing revenue account spend is projecting a cost pressure of £1.448million.

At the end of March 31 2020, the council also had more than £40million of reserves.

Cllr Malcolm stressed that a “significant proportion of reserves are committed for costs which [the council] will incur in future years leaving modest sums to cover anticipated costs.”

The report to cabinet adds: “Reserves were increased at the end of the 2019/20 financial year mainly due to the timing of Covid-19 funding from Government in March 2020 which was put into a reserve to cover costs in the 2020/21 financial year.

“We are seeking members approval to use the £6.034million reserve set up from Covid-19 funding as it is expected that there will be an overall shortfall in the funding received from Government in respect of Covid-19.

“Although a [reserves] balance of £40million may seem high, this is lower in comparison to similar authorities and once earmarked reserves are excluded, there is only a relatively small balance remaining to cover the many risks the council faces especially due to the impact of Covid-19.”

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