Sunderland regeneration and housing projects face the axe as council struggles with £12.3million covid black hole

Projects aimed at improving life in Sunderland face being scrapped ore delayed as the city council struggles with a £12.3million black hole owing to the pandemic, leaders have warned.
Deputy council leader Paul StewartDeputy council leader Paul Stewart
Deputy council leader Paul Stewart

Lost income from the likes of parking charges, leisure facilities and planning applications, and the extra cost of running some services, has blown a huge hole in Sunderland City Council’s budget.

Estimates suggest the financial hit to the council through extra costs and lost income could be almost £50million between March 2020 and March 2021.Despite Government support of £25million, this leaves a significant shortfall that will need to be addressed locally.

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Council chiefs say some of this financial hit will be in future years, but there is still a shortfall of £12.286m on the 2021/2020 budget which they say is largely as a result of the pandemic.

The council’s ruling cabinet will examine the gloomy financial picture at its next meeting on Tuesday October 13, and senior councillors are already warning some projects are facing the axe.

They say without Government ‘meeting its pledges to help councils meet the costs of Covid’, Sunderland would have no option but to use its earmarked reserves to balance its budget this year.Using earmarked reserves to cover this funding shortfall would mean the current planned use of reserves for works to benefit residents, such as regeneration and housing projects, would have to be cancelled or postponed, they said.

"If we have to balance the books with earmarked reserves, it could have an impact on regeneration and other projects,” said deputy leader of Sunderland City Council, Councillor Paul Stewart.

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"This update to our cabinet meeting has many questions and unknowns because of Covid."It is not yet fully clear how increases in the numbers of benefit claimants or how a reduction in the number of new homes being built will impact on the Council Tax and paying for services such as adult social care and support."The Government pledged earlier this year that it would assist in meeting the costs that are being incurred by councils across the country fighting Covid and preventing pressures building up on the NHS.”He added: "There are gaps in Government pledges and there is a crisis looming in meeting council Covid costs. This is a crisis that is not of this council's making - it's a failure of the Government to meet its pledges.”

The report to the cabinet - Second Revenue Budget Review 2020/2021 - outlines that further impacts from Covid are likely and there is a 'high degree of uncertainty' about what the final cost will be to the city.

The report to Cabinet also outlines new non-Covid costs, including the Hillthorn Farm Option termination fee of £1.768million.

This payment is connected to the new development proposals for Hilthorn Business Park, as approved by Cabinet in June, which will see £60million invested in the site, creating up to 1,600 new jobs.This involves a payment relating to the withdrawn gasification proposal and the reimbursement of reasonable and proper abortive costs previously incurred by the developer. These abortive costs have been subject to detailed assessment and verification.

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