St Helens Council pushes on with emergency budget

The impact of COVID-19 on local government over the past three months has been devastating, with a number of authorities, including Manchester and Liverpool City councils, indicating that they may have to file for bankruptcy.

Locally, St Helens Borough Council has projected losses of £36 million in the first six months of the pandemic alone.

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With the government providing £11.4 million in emergency funding, that leaves a funding gap of £24.6 million.

In light of this precarious situation, councillors this week agreed to press on with the development of an emergency budget for this financial year, which will see all council services come under review.

Chancellor Rishi Sunak is due to announce a package of measures as part of the government’s own emergency budget later this year.

On Wednesday, St Helens Borough Council leader David Baines warned there will be a “catastrophic long-term impact on essential services” if the government do not step in to meet the council’s near-£25 million funding gap.

Cath Fogarty, executive director of corporate services, also expressed concerns over the “seriousness and severity” of the situation.

“For us to be left with a funding gap of £25 million in-year that we need to solve, the scale of that and the actions that we would need to take to resolve that – I can’t underestimate the impact that they would have,” she warned.

Ms Fogarty said the medium-to-longer term position of the council and how that impacts future revenues “is a much greater concern” than the immediate danger.

The council is expecting to take a hit through lost business rates as businesses close-down during the inevitable recession, which will also affect residents’ ability to pay council tax.

“The impact on the forthcoming recession and the impact on the economy as a whole, for us to withstand that is going to be really difficult to weather,” Ms Fogarty said.

“And that will have a direct impact on our residents, on our businesses as they fight to survive and also on how that impacts on the balance of funding for us.

“The position which that leaves us in terms of an emergency budget, we don’t take that situation lightly.

“We do need to start working on that now, but we do eagerly await the fiscal statement promised by the Chancellor early June/July. What that will reveal in terms of either future emergency funding or changes to the fiscal environments or freedoms, will help us plan with some greater certainty.

“What we do need to start on now is looking at what those options are for us. And once we’ve got that announcement we’ll be in a clearer position about where those plans leave us.”

Cath Fogarty, St Helens Borough Council's executive director of corporate services

Three financial reports went before cabinet, including one that looked specifically at the financial impact of the pandemic.

The COVID-19 financial impact report paints a bleak picture for St Helens, and sets out the case for an emergency budget this current financial year.

Current projections carried out by the Liverpool City Region Combined Authority estimates that St Helens will face the second largest economic slowdown in the city region.

These projections predict a 39 per cent decline in output, placing more than 25 per cent of all of St Helens’ jobs at risk.

By September, it is estimated there will be a £240 million funding gap across the city region, with the emergency cash from government covering just 26-35 per cent of the estimated financial costs.

Cllr Martin Bond, cabinet member for finance, said the COVID-19 financial impact report made for “grim reading”.

He said the comprehensive plan the government is supposed working on to ensure financial sustainability for councils this financial year needs to come “sooner rather than later “, and warned that a return to austerity would “wreak even more damage to our communities”.

The Labour councillor also accused the government of shifting from its “do whatever it takes” mantra that ministers declared at the start of the pandemic.

As councils across the country predict massive funding gaps, the government is insisting the £3.2 billion provided to councils so far is enough.

The government has come to this conclusion based on data requested from council finance directors across the country.

Cllr Martin Bond, St Helens Borough Council's cabinet member for finance

Cllr Bond said the council has provided this information to the government, which is outlined in the COVID-19 financial impact report.

“This report, taken alongside the other two, provides the detail – and it’s grim reading,” Cllr Bond said.

“Particularly when at the outset the government told us to do ‘whatever it takes’.

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“Now in this authority, we know how this government operates.

“And we are rightly weary of this silver-tongued promise.

“As could have been predicted, this has proven to be an unreliable promise.”