Cardiff Council faces £25m budget gap for next year

Dealing with COVID-19 has cost Cardiff Council £39m in the first four months of the financial year.

The huge costs are revealed in a report to the Council’s Cabinet which will also hear projections for next year’s budget, which could see the council having to find ways to bridge a £25.5m budget gap in 2021/22 in order to balance the books.

The £39m cost of COVID-19 is made up of both expenditure and lost income. The council has spent £26m on services related to tackling the effects of the virus and a further £13m has been lost in income.

A breakdown of the estimated £26m cost to the council of responding to the pandemic includes but is not limited to:

• £6.3m on adult social care;
• £5.2m spent on personal protective equipment (PPE);
• £3.3m on providing free school meals to around 12,000 pupils daily
• £1.9m on housing to support the homeless during the pandemic.
• £1.6m on bereavement services – (enabling the procurement of a temporary morgue facility);

The council has also revealed the £13m lost in income caused by the pandemic over the same period.

This includes but is not limited to:

• £3.5m lost in parking fees, parking penalties and Moving Traffic Offences (MTOs);
• £2.7m lost from cultural services;
• £1.75m lost from school catering.

Cabinet member for Finance, Modernisation and Performance, Cllr Chris Weaver, said: “Cardiff Council has reacted quickly to the crisis, changing the way we work, putting clear focus on maintaining essential services which deliver for our most vulnerable residents. Welsh Government has also stepped up to the plate and is helping to cover these huge costs to the council. If Welsh Government didn’t step in I’d hate to think of the financial black hole we could be facing now.

“As it stands we have so far applied to Welsh Government to reimburse us for around £21.4m of expenditure, which is what we spent up to the end of June, and they have agreed to give us £19.6m of that. We will be applying for all other spend and lost income to be covered too as we look to tackle the virus and to do what we can to keep people safe and save jobs.

“We estimate that if Welsh Government doesn’t continue to help the council then a further £34m in lost income and expenses could be generated by year end. It’s vital they continue to back local authorities with the money which can help them survive this crisis.”

While Cabinet will consider the ongoing cost of dealing with COVID-19 when it meets on Thursday, September 17, it will also receive a report into the Council’s financial projections for next year.

The report will reveal an expected budget gap of £25.5m. Money which will have to be found if the council is to balance the books.

Cllr Weaver said: “Coming through the first COVID wave and seeing the cost of the pandemic in black and white is sobering enough. But now, on top of that, we are facing another huge financial challenge next year, a budget gap of £25.5m. This is beyond the costs of COVID and it looks like we will have to find at least £19m of that shortfall in savings. To do that we will have to look long and hard at everything we do.

“This council has already found £225m in savings over the past 10 years, and reduced staffing by 1,600 full time posts in that time. These are huge figures, and having cut so deep before, it becomes harder and harder to find places to go for more savings. Along with capital financing, schools and social services account for around 70% of the council’s budget. We have really delivered the majority of savings from other council functions over that time and it’s proving difficult to squeeze more out of these areas.

“We will bring forward a plan for residents to consider and consult on in December, but clearly we are looking at big changes to services now. We want to continue to deliver the services that residents, want and deserve, but that costs money and we are reaching a point where some really tough decisions will have to be made.

“At times like this – when economic recovery is desperately needed – it’s vitally important Government recognises the value of the public sector, and the role it can play in helping to deliver jobs and kick start projects. Positive talks are ongoing between Welsh Government and local authorities. But funding will be crucial to ensuring we can deliver the services people expect especially as we also face the possibility of a ‘No Deal’ Brexit during the worst recession ever recorded.”