Vale Council Faces £10.5m Funding Black Hole Due to Covid

  Posted: 28.07.20 at 18:19 by Local Democracy Reporter Alex Seabrook

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The Vale of Glamorgan council is facing a £10.5 million funding black hole next year, due to the coronavirus.

The council is planning to raise council tax by 4.9 per cent next April, but even with this extra income, next year’s budget “will be very difficult” as the costs of Covid-19 begin to add up.

The £10.5 million funding shortfall comes from new services like providing personal protective equipment; extra demand on existing services like homelessness support; and less income from car parks, council tax and business rates.

The Vale cabinet met on July 27 to approve the budget strategy for the next financial year, beginning April 2021, and to discuss the money problems caused by the pandemic.

During that meeting, council Leader Neil Moore said: “The Covid-19 pandemic is resulting in the council having to support new services and new ways of working, in order to support residents in the Vale. While the Welsh Government is providing support, we anticipate some additional costs will have to be met by the council.

“We have to consider the effects of Covid-19 and the impact on welfare reforms that could have a knock-on effect on the council, in terms of higher arrears and increased homelessness.

“Homelessness will be a major one when the pandemic is over and we’re no longer required to put them up in hotels. As a result of the pandemic, there’s also greater demand on social services. And we still don’t know when the lockdown is going to finish.”

Adding to the pressure is the Welsh Government, who are keeping councils in the dark about how much money they will provide next year, and even when they will announce how much money councils will receive. Brexit is also still creating uncertainty and making it difficult to plan ahead financially.

Cllr Moore said: “It’s going to be difficult to assess what settlement is going to come next year or even in the coming years — specifically if the Welsh Government reviews their specific grants, because those grants are an important part of our income.

“There also remains uncertainty considering our exit from the European Union, and this doesn’t help in moving forward.

“So it’s not going to be an easy process, because we don’t know where we’re starting from. Even with a council tax increase of 4.9 per cent, that would still leave us with a shortfall in funding of £10.5 million.”

The cabinet also closed the accounts for the last financial year, ending in March 2020. While the council broke even last year, one department spent significantly more than its budget: additional learning needs spent £755,000 more than budgeted, a third of which was on placing pupils at special needs schools.

Cllr Lis Burnett, cabinet member for education and regeneration, said: “We have major pressures with supporting children with very complex needs. Sometimes we don’t have the facilities to support those children in the Vale and the type of facilities they need are away from the area, which can have huge costs on the budget.”

Social services was also under pressure, due to the high cost of placing children in care homes. However the Welsh Government stepped in with a grant of £500,000, so the department ended up spending less than budget overall.

Cllr Ben Gray, cabinet member for social care and health, said: “It’s pleasing to have the underspend, to be able to reinvest more of that into the reserves and put us in the strongest possible position to bolster the service we’re offering in response to Covid-19.”

Each department was told to cut part of its budget, with a total target last year to save £3.2 million across the council. But one fifth of these savings were not made. Nearly three quarters of the council’s total budget is spent on social services and education.

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