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Covid-19 could lead to £55 million deficit in Bradford

The authority has faced a range of increased costs, from providing food to vulnerable residents to buying PPE.

Unless it is provided with more Government support, Bradford Council may face a deficit of around £55 million by the end of the financial year.

Councils across the country are facing huge financial pressures due to the Coronavirus crisis as they see a huge cut in many of their income streams, such as parking tickets and leisure centre income as well as increased costs in social care, such as purchasing PPE and providing food for vulnerable residents.

Now Bradford Council has revealed how those pressures will be felt locally.

Although the Government has provided over £30 million to Bradford Council to deal with Covid-19 related costs, a Council spokesperson said this will not even cover the extra costs accrued until the end of July. The Council says that “realistically” the impact of the lockdown will hit Council finances long after the summer.

Bradford has been awarded £30.5 million from the Government so far. However, the Council says the total financial impacts of Covid-19 on Council finances by the end of July are likely to be £39 million.

The Council’s Executive will be given a detailed update on the financial situation, including ways to reduce the deficit, at a meeting in July.

Councillor Susan Hinchcliffe, Leader of Bradford Council, said: “These are unprecedented times where extraordinary costs have been incurred keeping our staff and public safe.

“Whilst we are grateful for the funding provided so far by Government, this is clearly nowhere near enough to cover the financial gap we have in this current year. We’re calling on Government to fully compensate councils for these costs; we are at the frontline of keeping our communities going in these difficult times and the Government needs to acknowledge that contribution.

“I’ll be working alongside other local government leaders of all parties to make this case nationally.”

Chris Chapman, Director of Finance and IT at Bradford Council, said: “The Council’s net revenue budget for 2020/21 is £378.080m, as approved by Full Council in February.

“The anticipated shortfall (2020/21) is wholly dependent upon the extent of any lockdown and the resultant depth of any recession / economic downturn, which will in turn affect the costs the Council is incurring (eg PPE, supporting care sector), and revenue being lost (eg from parking revenues, sport and leisure activity, theatre sales, business rates).

“The financial return sent last week to Government identified total financial impacts to the end July of £39m, which is £8.5m in excess of central government grants received.

“Realistically the impact will be felt long after end July and therefore the impact will be higher.

“If no further Government funding is received we are forecasting a year end deficit of £55 million.

“The Council has a general reserve balance of £15m which auditors consider minimal to meet operational requirements and an unallocated reserve of £10.3m.

“We continue to lobby for additional central funding to meet the full cost impact of dealing with the emergency. The financial position will be reported to the Executive Committee in July.”

On Friday the Local Government Association called for greater clarity from the Government on the support that will be available for Councils.

Findings from the national group say that Councils have lost out on £470 million in business rates and £506 million in council tax income due to businesses closing and residents under financial pressure and unable to pay bills.

Cllr James Jamieson, LGA Chairman, said:  “Local government continues to lead the way during the emergency response to this crisis, but they are being stretched to the maximum.

“Vital emergency funding from government has helped meet extra cost pressures and lost income in the past three months.

“Concerns remain about the ongoing financial pressures ahead. Councils will need further funding and financial flexibilities in the weeks and months ahead to meet ongoing Covid-19 pressures and to keep services running normally.

“Certainty around this is desperately-needed so councils can balance their budgets this year and take vital decisions about how to pay for vital local services next year.

“Councils not only need to be fully funded to help our communities beat this virus now but also to help support the nation as we tackle the unprecedented social and economic task ahead and move into the next phase.”

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