Coronavirus: South Gloucestershire Council facing £27m black hole of debt as extra funding not enough

Coronavirus could leave South Gloucestershire Council facing a black hole of at least £27million, the authority’s leader has revealed.

Councillor Toby Savage, who heads the council’s ruling Conservative group, made the gloomy prediction during a virtual cabinet meeting on April 27.

Responding to a question from the Labour group about the financial impact of Covid-19 on the council’s finances, Cllr Savage said early indications were that a budget shortfall of £26.7million was expected.

The authority has received about half that amount in coronavirus emergency funding from the government so far.

Cllr Savage said: “As part of our reporting to the government around our financial performance, we are showing an indicative £26.7million deficit for this coming financial year. 

“That is the projection that we're making based at this early stage of the financial year.

“That's based on decisions that we've taken to date to increase spending in a number of areas of the council, but also includes a number of losses of income including around council tax and business rates.

“That information is submitted to government to inform their understanding of the challenges facing the local government sector.”

Toby Savage (Copyright Unknown)

Local authorities across the country have recently learned how much they are receiving in the second of two waves of £1.6million of Whitehall funding to tackle the immediate crisis.

South Gloucestershire Council has been awarded £7.9million this time, on top of the £6.1million it received last month, for a total of £14million altogether.

Cllr Savage said council officers would be meeting regularly to monitor the financial impact of the pandemic.

The initial estimate was made just 27 days into the first quarter of the new financial year, he noted. 

The predicted £27million shortfall is against a net revenue budget of £232million for 2020/21.

A council spokesman said: “This estimate is based on things returning to normal by September this year, but it may change as the situation develops and if additional funding is made available to help with associated costs."