Southwark town hall faces £50million budget overspend if it is left high and dry by lack of government Covid-19 cash

By Grainne Cuffe, local democracy reporter

Southwark support for vulnerable families, schools, roads programmes and support projects could be decimated next year as its town hall faces a £50 million funding gap in the wake of the Covid-19 pandemic.  

The stark figures come just two months after council leaders set a “strong” budget – before lockdown hit.

Areas likely to be hit are frontline services such as social care, business-boosting projects, sport, parks, schools support, anti-gang work and crime prevention projects, the arts, support for children and disabled groups.

Cllr Victoria Mills, cabinet member for finance, performance and Brexit, made the bleak forecast at a virtual cabinet meeting on Tuesday (June 16).  

She said: “At the moment it looks like Covid has cost us over £47 million in terms of additional costs and lost income. 

“That is the amount after we applied the money that we have received from Government. 

“We are facing a huge challenge and when we bring the budget remit report to July cabinet, we could be looking at an upper end of savings and efficiencies that we will have to find in 2021/22 of £50 million, and that is pretty bleak.  

“We don’t have figures to share on the Housing Revenue Account (HRA) at this stage, [but] I think it’s fair to say that the HRA is not in good shape at the moment either,” she said, adding that the council is “facing some huge financial challenges” and that “work and planning needs to begin now”.  

Cllr Mills made the comments while presenting reports on capital and revenue outturn for 2019/20, which see how the council is doing in terms of the approved budget versus spending.  

She said that in March the council was in an “incredibly strong position”, adding: “In terms of what we said we would spend and what we said we would do in 2019/20, we did those things.”  

Cllr Mills  said that pressures on homelessness, temporary accommodation, leisure contracts, and tree management “meant we spent our £4 million contingency”, but that “savings and efficiencies” made in children’s services and adult social care led to the council ending the year on budget. 

However, she added that Covid-19 had “somewhat ruined” the strong financial position.  

Many councils are concerned about the financial implications of Covid-19.  

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

A spokesperson said the Treasury “announced unprecedented support for public services, workers and businesses to protect against the current economic emergency”, including £3.2 billion of additional funding for local authorities. 

But the Government has not yet commented on whether it will fulfil its earlier promise.