Islington Council calls on Government to fulfil promise to do ‘whatever it takes’ to fund Coronavirus costs

Islington Council is calling on the Government to fulfil its promise to do ‘whatever it takes’ to win the war against Coronavirus, including guaranteeing the funds it needs to deliver its essential services in unprecedented times.

Local authorities up and down the country have been facing huge extra costs in delivering the response to the health crisis on the ground, while some income sources used to pay for council services have collapsed.

Despite careful financial management in Islington leading to an £8 million underspend in the last financial year, and Government grants of almost £16 million so far to deal with increased costs, the council estimates it is still facing a £36 million funding gap in 2020/21.

Cllr Satnam Gill, executive member for finance and performance, said: “The council has done well to come in with an £8 million underspend last year, thanks in no small part to the competence and diligent work of our senior officers across the departments in what were already very difficult times, 10 years into the Government’s austerity drive.

“Under normal circumstances that would have shored up our financial position, and while it will undoubtedly help, the impact of coronavirus has been unprecedented, hitting our income at the same time as the surge in demand on services increases our costs.

“Our budgets will be under the greatest pressure this financial year, with the longer-term impact less certain and more difficult to predict.

“The financial impact of this crisis is simply too great for any local authority to shoulder; we have been prudent with our financial management and yet still face a funding gap this year of £36 million, which our reserves do not cover.

“The Government needs to do the right thing and urgently fulfil its promise to do ‘whatever it takes’ to protect the vital local services our residents rely on, and help us to keep people safe.”

A report on the provisional outturn for the last financial year is due to be discussed at the council’s Executive on 18 June.

It shows prudent planning and management of council finances led to an £8 million underspend at the end of the 2019/20 financial year.

While this has helped strengthen the council’s financial resilience, the impact of the coronavirus pandemic has been significant, hitting several of the council’s key sources of income that help keep services running and protect residents.

The council expects to face additional costs of £24 million this financial year delivering the local response to the health crisis, combined with an estimated loss of income totalling £50 million.

Government grants to help offset these extra costs have so far totalled £15.575 million, leaving a gap of around £58 million.

This comprises a budget shortfall in the General Fund of £36 million for 2020/21, plus lost income this year that will have an effect further down the line. This includes £10 million in Council Tax and Business Rates income losses and £12 million losses predicted in the Housing Revenue Account, which receives tenants’ rent payments. Both of these would impact future financial year budgets.

A budget monitoring report will be made to the Executive on 9 July to consider the latest 2020/21 budget position in more detail.

This funding gap comes on top of the agreed savings programme already built into the council’s Budget for 2020/21. The Government’s austerity programme has seen the council have to make savings of almost £250 million since 2010.

Notes to editor

The full Provisional Financial Outturn report for 2019/20 is available here.