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Coronavirus puts pressure on council finances - report

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There is a “high risk” Dudley Council will need to dip into savings to balance the books this year as a result of extra costs - including those incurred fighting the coronavirus.

A report set to go before the local authority’s ruling cabinet reveals finance bosses currently predict the cost of Covid-19 on the council coffers for the financial year 2020/21 to be £27.5 million.

But the figure has been reached with “significant uncertainty” and could end up being much higher, the report says.

The council has received a government grant of £19.1 million to offset increases in expenditure and reductions in income as a result of the pandemic.

But with anticipated increased spending and loss of income - including council tax and business rates - due to Covid-19 and other financial pressures, the report says it is likely the council will need to use some of its reserves to meet the black hole in the finances.

Such a reliance on reserves could become “unsustainable” in future years and “as early as next year”, the report says.

Councillor Steve Clark, cabinet member for finance, said:

As a council we have received over £140 million from the government to help people in the borough deal with the fall-out from the coronavirus pandemic.
That support has been very gratefully received – but over 85 per cent of that cash is ring fenced and is for specific purposes, such as business grants.
It is unclear at this stage whether the £19.1 million we received to offset our extra spending and reduced income as an authority will be enough to cover what we’ve had to pay out.
There is a very real risk that it won’t be, and that we will have to use reserves to cover the difference. That is always a last resort, and is unsustainable for anything other than a short period of time.
We will continue to monitor the financial situation against an ever-changing backdrop, and may need to identify additional savings from next year.

The report will be discussed at the next cabinet meeting on Monday July 6.

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