Lewisham council left with £25m deficit due to lockdown

By Grainne Cuffe, Local Democracy Reporter

The coronavirus epidemic has left Lewisham council with a £25m black hole in its budget.

The Government initially promised to cover councils’ costs for tackling the pandemic, but has recently appeared to backtrack.

Chris Barnham, cabinet member for school performance and children’s services, raised the concerns at a mayor and cabinet meeting last Wednesday which was focused on a report discussing the response to Covid-19 and a recovery plan for businesses and residents.

He said: “I’m quite concerned about the financial cost – we’ve had to do this, it’s the right thing to do – but it worries me.

“I naively thought that when the Local Government Secretary said to council leaders on March 16 “the Government stands ready to do whatever is necessary to support councils in their response to coronavirus,” that meant that whatever we did would be supported, and I’m quite concerned to hear that the Government seems to be backing away.

“I wonder what we and others might be able to do to encourage them to live up to their bold promises on March 16.”

A spokesman for the Treasury said the Government is not commenting on speculation about future costs.

He said: “As the Chancellor has said, it’s too early to speculate on these things, but what we do know is that we’re facing a time of unprecedented economic uncertainty.

“What’s clear is that if we had not acted in the way that we did at the scale and speed that we did, the situation would be far worse.

“That’s something that the OBR and the Bank of England have both confirmed.”

Cllr Joe Dromey, cabinet member for culture, jobs and skills, who presented the recovery plan report, praised the Chancellor for the coronavirus job retention scheme and the self-employment income support scheme.

But he said: “There’s a big contrast between genuinely doing what it takes to protect jobs and incomes on the one hand, and the continuation of the starvation of local government.

“We already went into this crisis with a tenuous financial situation after a decade of cuts, and we were initially given hope that the Government would do whatever it takes to support us – that seems to have been withdrawn recently.

“We’ve got reserves, and those are here for a rainy day, and we are going to do whatever we can to support businesses and residents.

“But we know that we will see local government pushed very close to the edge by this crisis.”

Mayor and cabinet approved the recovery plan during meeting, which sets out the steps the council is taking to support businesses and residents through the initial three months of the coronavirus crisis.

The recovery plan includes offering support grants to residents, deferring business rents, foregoing some fees and charges, and creating a ‘Lewisham backs business’ task force, made up of lead members and representatives from the local business community, industry, and officers “to develop and coordinate a whole council response to supporting business and jobs recovery quickly and inclusively from the disruption of Covid-19”.

The council has also sent out more than £34 million in small business grants to over 2,500 businesses.