Covid costs eating into financial reserves as Havering Council faces £36m overspend
PUBLISHED: 16:00 15 October 2020
Havering Council is facing an overspend of £36million because of the pandemic and expects the situation to go “downhill over the next couple of months”.
The council has so far spent £11.87m dealing with coronavirus and has received £16m in government support, with the promise of an as-yet undecided amount to come.
However, the council has also lost £12m in expected income and has been unable to make many of the savings it had anticipated when it set the budget for this year.
Chief operating officer Jane West told the overview and scrutiny committee on Tuesday, October 13 that setting the council tax for next year is likely to be “really difficult”.
She said: “In February when we set the budget, we had no idea we were going to have to find another £11million or lose income of £12million.
“We are not going to be able to deliver £6.8million of the planned £14million in savings because people have been distracted by the Covid response.
“What this does is completely wipe out the general reserve and begin to eat into earmarked reserves that the council has.”
She said the current financial situation was “the most difficult position I have ever had to deal with” during her 20 years in the role.
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The council spent the bulk of the money during the pandemic on adult social care, while also spending £1m on its sports provider and £600,000 on food distribution.
The biggest loss, of £3.5m, was due to not charging parking fees during the first lockdown.
Committee member Cllr David Durant (Independent Residents’ Group, Rainham & Wennington) said the figures “should leave anyone shell-shocked”.
He said: “The government is ruling by decree, saying we are focused on this one virus to the exclusion of all else and it is wreaking havoc on our finances.”
Chairman Cllr Darren Wise (North Havering Residents’ Group) responded that the council “does not have a say in government policy” other than through local MPs.
Ms West added: “The second wave puts us under further risk of a worsening position. If the government is responsive, they may match that with further funding.
“They have expected us to shoulder about £14million of the pain so far. I think they appreciate we are running out of resources but potentially they are running out of cash as well.
“It’s unlikely we are going to get a reserve until literally just before Christmas, which will be really difficult with setting council tax in January.
“We were anticipating reductions (in government funding) last February when we set council tax, they are probably going to delay that until the year after.”
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