Pandemic blasts £40million hole in Sunderland's finances - city leaders to discuss financial impact of crisis

The impact of Covid-19 on Sunderland City Council’s finances will be put under the spotlight by council chiefs next week.

Tuesday, 7th July 2020, 3:40 pm
Updated Tuesday, 7th July 2020, 3:41 pm
Cabinet Secretary, Coun Paul Stewart

Two reports prepared for the authority’s ruling cabinet outline how income, expenditure, cash flows and council projects have been affected.

One report ‘capital programme first review’ will look at investment and infrastructure, while the ‘first revenue budget review’ will look at ongoing revenue and spending on hundreds of council services.

Latest estimates for the meeting suggest that the council has faced costs and lost income of approximately £40.6million as a result of the pandemic.

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As of Monday July 6, Sunderland had received £18.2million from the Government towards its costs, a shortfall of £22.4million.

The shortfall is a slight improvement from the April and May returns submitted to Government and reflects the latest available information and assumptions.

Updates on a new tranche of Government funding for local authorities are also expected at next week’s meeting.

The finance reports to cabinet set out how Covid-19 could impact on the current 2020/21 year budget, as well as the costs that will impact on council finances next year and into the future.

Current estimates for 2020/21 are an overspend of around £10.6million, largely arising from the virus.

Meanwhile, the revenue report outlines a significant impact on adult and children’s social care, the majority of which is related to the virus.

In adult social care alone, a financial pressure of £15.757million has been identified which is linked to increased “complexity of need” and pressures around care homes fees, workforce and PPE.

In addition, an extra £322,000 is estimated to be incurred on bereavement services, there is a forecast shortfall of £391,000 from trade and garden waste receipts, rental losses at council properties of £1.397 million, and an overspend of £492,000 on homelessness provision, among others.

Cabinet Secretary, Coun Paul Stewart, said: “The council continues to monitor its budget and do its upmost on providing the services that everyone requires.

“We were told in March by the Local Government Minister that the ‘Government stands ready to do whatever is necessary to support councils in their response to coronavirus’.

“The Prime Minister has also given a commitment to fund the costs of local government during Covid-19.

“Naturally, the city council rightly expects that these commitments to help Sunderland are met.

“As our meeting reviews the figures, this council is reminding the Government of its promises and commitments to help us meet the costs of these extraordinary times.”

The reports to cabinet outline that a number of the council’s contractors and suppliers paused operations from mid- March 2020 due to the impacts of Covid-19.

Work did recommence on major schemes during late April and into May and progress continues to be made on projects such as the Sunderland Strategic Transport Corridor Phase 3 and the City Hall on the former Vaux site.

During Covid-19, the city council’s cabinet has begun meeting remotely with meetings available on the council’s YouTube channel.

The next meeting will be livestreamed from 10am on Tuesday July 14 and can be viewed here:

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