Harborough council leader warns of a £1.6 million black-hole in funding due to the coronavirus

The leader of Harborough council is warning that they are facing a funding Covid-19 black-hole of at least £1.6 million.

Cllr Phil King said it was “deeply concerning” the authority is being left short by the Government after being battered by the coronavirus crisis.

The council has been hit hard by the ongoing pandemic after forking out money to support community hubs while losing crucial income from revenue streams such as parking fees and business rates.

Phil told the Harborough Mail: “We have been hit by a perfect storm – and it’s very worrying.

“The Government promised every local authority at the start of the pandemic that we would be reimbursed for all the extra cash we’d be forced to spend during this unprecedented time.

“But that’s just not happened and I am very disappointed.”

He added: “We have been paid back about £1.2 million up to now in three separate tranches.

“But this pandemic has so far cost us about £2.8 million in lost income and greater spending.

“So that’s leaving us about £1.6 million out of pocket by the end of this year.

“That figure could well go up even more, generating significant pressures on our funding, and none of us knows how long this extraordinary situation is going to last.”

Phil said they are continuing to urgently press the Government for more lifeblood money as well as lobbying Harborough MP Neil O’Brien for help.

“The virus crisis has hit councils for six up and down the country – and many of them are far worse off than we are.

“But it’s obvious that unless we recover all the cash we have lost out on this could impact on new investment programmes and services.

“We are trying to boost our local economy by waiving our rent on buildings that we rent out to businesses,” said the Conservative council chief.

“There are up to 18,000 people economically inactive out of 50,000 across Harborough because of this pandemic.

“That’s a huge figure and it has a sizeable impact on our economy as well as meaning that we generate less income.

“We will have to look seriously at how we set up our budget for 2020-2021.

“The law requires that we set a balanced budget every year.

“We have held a briefing on this with staff and members and work is being carried out at the moment to look at the measures we may have to take.

“This is not a pretty sight.

“The Government knows the situation and knows that we have a serious funding gap.

“We are suffering because of the Government’s decision to impose the Covid-19 lockdown in March.

“We all understand why they acted as they did but still it wasn’t our choice as town centres, shops, sports centres and so on were suddenly shut overnight.

“So it’s only logical that they carry out their promises right at the beginning to pick up the bill and reimburse us full stop.

“There has also been a lack of clarity over future Government funding and that’s not good enough.

“We need to have our shortfall made up as soon as possible so that we can begin planning for what we do across Harborough next year,” insisted Phil.

He spoke out as Leicestershire County Council warned it is facing a gaping £18 million “overspend” this year.

“Extra costs and loss of income have increased costs by £90 million this year alone – which after Government grants and guidance reducing the need for extra bus services, leaves an £18 million gap,” said the council.

Cllr Byron Rhodes, the county council’s cabinet member for finance, said: “Covid-19 has exacerbated an already challenging financial situation.

“I’m pleased that the measures we’re taking are working but the financial impact in future years is even more uncertain.

“Even without further lockdowns, it is vital that the county council continues to reduce this year’s gap to avoid an impossible challenge building up in future.

“The financial difficulties experienced pre-Covid, relating to demand for services, have not gone away and the mitigations have been disrupted by the crisis.”

He added: “This means that focusing on our priorities is crucial.

“And that’s why we’re working closely with managers to stop non-essential recruitment and spend and step up spending controls.

“Thanks to taking tough decisions since 2010, we’re in a good position compared to other councils who are effectively about to run out of money.

“And furloughing some staff, reviewing capital projects and controlling spend mean we’re not at risk of being unable to balance the books in the short term.

“Government support has been significant but not enough.

“Without funding reform or a major efficiency initiative, more savings will be required including service reductions.

“The rule of six announcement this week highlights how precarious the situation is - and the real risk of a return to greater lockdowns that would have significant financial consequences.”