Sunderland chiefs prepare for financial 'armageddon' as they plan for post-Covid worst-case scenario

Sunderland City Council is already facing a budget deficit of more than £20million after the coronavirus outbreak saw income plummet and costs surge.

Although government grants have softened the blow, they have not been enough to close the gap entirely, but spending chiefs in the city are at least not facing problems on the scale affecting some English councils.

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“We’re planning for the worst case scenario,” said Jon Ritchie, the city council’s executive director of Corporate Services.

“It would be easy to go for an armageddon figure and our worst-case scenario assumes everything works against us, so I would rather not comment on figures yet.

“We need another 1.3 times the grant we’ve already had – some local authorities have talked about needing three or four times the grant.

“If it gets worse we would have to look at stopping non-essential services and then looking at how we deliver essential services.”

Ritchie was speaking at a meeting of the city council’s Scrutiny Co-ordinating Committee, which was held by videolink and broadcast via YouTube.

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Financial pressures linked to the coronavirus outbreak have prompted several councils across the country to warn they could be forced to issue a Section 114 notice, effectively declaring themselves bankrupt.

The city council currently holds cash reserves of almost £170million, prompting opposition Conservative councillor Dominic McDonough to ask if this could be used to plug spending gaps.

But Ritchie explained most of the money was already allocated for other purposes and using it could have much longer term implications for the council’s finances.

“The cash is sat there and we could spend it,” he told the meeting.

“But my argument would be that it would not be financially prudent to do that, unless there was a plan to replenish it.”

He added: “If we use this money then we will need to replenish it at a time when we know finances will be tight.”

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