Southwark’s financial situation is ‘better than expected’ after funding from Government

By Grainne Cuffe, local democracy reporter

Southwark’s financial position in the wake of the pandemic is better than expected following Government funding, the cabinet lead said yesterday. 

Cabinet members were considering a monitoring report on the general fund, housing revenue account, and dedicated schools grant for the 2020-21 financial year.  

In February the council approved taking £5 million from its around £21 million of reserves to balance its budget. 

But following Government funding its reserves have increased to £28.8 million, though it expects the extra money will be used to cover the ongoing cost of the pandemic.  

Cllr Rebecca Lury, cabinet member for finance, performance, and democracy, told members that it’s “been an extremely difficult time for us trying to figure out how much money we got in from Government through Covid support and how much we gave out”. 

“We are able to present today a balanced outturn position and actually one that’s more favourable than we thought it would be. 

“Over the last year we have seen a considerable amount of money come from Government to support us through Covid.  

“That amount has now been reconciled as £43.5 million that we received over the last financial year.  

“Obviously there have been significant impacts on the council that were unforeseen or that weren’t supported by Government,” she said.  

The council was able to claim 75 per cent of its losses due to Covid from Government, while increasing its reserves.  

“But we would presume that the money we have put into reserves will be used this financial year to support the ongoing Covid crisis,” Cllr Lury added.  

The council’s budget is also under pressure from an ongoing £20.6 million deficit in the DSG, driven by an increase in Education and Health Care Plans (EHCPs), the extension of responsibilities to age 25, and increases in parental rights. 

There is also a limited supply of special provision across the country, alongside an increase in the level and complexity of need, “most notably with regard to Autism Spectrum Disorders”, according to the report.  

Other pressures include a near £16 million hole in the environment and leisure department, with the leisure industry severely hit by the pandemic, and the housing department experiencing a deficit of £14.5million 

“Homeless levels nationally have progressively increased over the last decade due to welfare reform changes and the unaffordable nature of the private rental sector, particularly in London, where market rents far exceed LHA rates.  

“Temporary accommodation (TA) demand has been and continues to be acute in Southwark and the council has had to commit significant additional resources to it over recent years and again for 2021-22,” according to the report. 

It states the situation has been “seriously exacerbated” by Covid-19, with a 34 per cent increase year on year in homeless acceptances.  

The council rehoused 324 existing clients from shared hostel accommodation and over the period a large number of rough sleepers due to the pandemic. 

The cost of TA provision was around £9.2 million more than the previous year.  

“The aftermath of the pandemic will continue to be felt moving forward, as government financial assistance schemes end and with increasing business failures and rising unemployment.  

“It is also anticipated that there will be a further spike in homeless applications as the embargo on private sector evictions ends, leading to considerable budget uncertainty throughout 2021-22 and beyond,” the report states.