'Stark' financial position outlined in budget forecast
Wigan Council is facing a deficit of £25m next year, according to a revised post-Covid budget forecast.
The ‘stark’ financial position caused by the pandemic is detailed in a report tabled for cabinet members.
It comes as analysis reveals town halls across Greater Manchester will have to tackle a net deficit of £368m.
The report, due before cabinet next week, says increased costs and falls in anticipated income could mean ‘difficult decisions’ lie ahead.
Leader of the council, Coun David Molyneux, said: “The financial position we are facing is unprecedented because of Covid-19, but let’s not forget it comes against a backdrop of having to cut £160m from our budget during the last decade.
“The response from our communities has been inspirational but these forecasts paint a bleak picture.
“We’ve risen to the challenge to help those who need it, but it’s been at a massive expense.”
Although the full impact of the pandemic will not be known for some time, the UK economy has been placed under significant pressure.
This will continue to have a knock-on effect as rising unemployment levels and struggling high streets impact on the council’s sources of income.
Shortfalls are predicted in council tax (£5m), business rates (£6m), fees, charges and commercial income – such as the Manchester Airport dividend (£8m) - and housing rents (£7m).
This is coupled with the cost pressures associated with keeping frontline services running during the pandemic and sourcing PPE.
Recent analysis from the 10 GM councils and the GM combined authority highlighted a total net deficit facing local government finances of £368m, taking into account grants and reserves.
Mayor of GM, Andy Burnham, said: “Without urgent support, this funding crisis will engulf local government and endanger the vital services that councils provide to the community, particularly for the most vulnerable.”
Coun Molyneux added: “Something has to give, local authorities are bearing the brunt and some are facing the real threat of running out of money and issuing section 114 notices.
“Combined with the continuing uncertainty around the outcome of Brexit negotiations, it is extremely difficult for us to plan for years ahead.
“Through the success of The Deal and prudent financial planning we were able to navigate our way to a position of agreeing a first ‘no-cuts’ budget for a decade last year.
“But we now find ourselves in an unenviable position.”
Wigan Council has received around £19m in emergency funding from the government, and there have been grants for businesses, a council tax hardship fund and care home infection control fund made available, the report states.
The most recent submission to government details that the council is facing a funding gap of £40m.
The council has already reviewed its capital programme with several planned schemes pushed into later years.
Pre-pandemic forecasts for the 2021/22 budget included a savings target of around £9.5m for the council but this has now increased to £25.2m.
Residents are being urged to help shape the council’s recovery plans by completing the Covid-19 Impact Survey (external link).
Those who complete the survey will have the chance to win one of five iPads. Full details on how to enter are at the end of the survey.
Posted on Thursday 25th June 2020