Telford & Wrekin Council resists call to use reserves to plug £18m Covid gap
Telford and Wrekin Council needs to be “pragmatic” and not use its near £20 million reserves to plug a spending gap during the coronavirus crisis, the authority’s leader has said.
Councillor Shaun Davies said the council needs to be “pragmatic” and keep the money back in case a future crisis strikes as his cabinet received the 2020-21 Financial Monitoring Report.
Councillor Rae Evans, who holds the finance brief in the Labour administration, said central government had given the National Emergency Response Funding grants worth just over £10.1m, but demand on services and a slump in council tax and business rate collection meant a £18.6m black hole remained.
She said extra funding from Whitehall was needed, but Conservative leader Andrew Eade, who attends cabinet as a non-voting opposition observer, argued in favour of using the reserves, saying the Covid-19 pandemic was exactly the sort of “rainy day” the reserves were built up to deal with.
Councillor Evans said Telford & Wrekin Council said the report showed “projected pressures on service budgets of £20.7m arising from additional costs of lost income”, and £8m worth of council tax and business rates was missing, partly because of a deferral option offered to taxpayers.
To help plug the deficit, she said, “the Government has given us grants of £10.1m, but that still leaves us with a net in-year pressure of £18.6m”.
She said: “On March 16, [Housing, Communities and Local Government Secretary] Robert Jenrick [MP] said ‘This government stands with local councils at this difficult time. Everyone needs to play their part to help the most vulnerable and support the local economy. The Government will do whatever is necessary to support these efforts.’
“The time has now come for them to deliver on this commitment.”
Councillor Eade said: “We’ll wait and see what other announcements are coming but, clearly, local government has stepped up to the plate and, here in Telford and Wrekin, it has done that pretty well. There is no manual for Covid and it is an unknown process.
“My question, that you were unable to answer at the last cabinet meeting, is that this authority still has usable balances and reserves approaching £20m. It’s public money, put aside for ‘mending the roof on a rainy day’. At the moment it’s not only pouring down but, due to Covid, the roof is also missing.”
Councillor Davies said: “As you always say, once you’ve used the reserves once, they’ve gone.
“We have used reserves to cash-flow the council’s operations. We will continue to do that, but we will have to do it in a sensible way.
“As you say, you can repair the roof with the reserves, but if, next year or this year, because of Covid, there is another storm, then the roof will be broken without a budget to fix it, so we do need to think about it pragmatically.”