Cash-strapped Kirklees Council dipping into 'low reserves' amid Covid-19 pandemic

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Kirklees Council could run out of money by the end of the current financial year.

That is the grim warning from one senior figure who says the impact of the coronavirus pandemic has led to the authority dipping into its ‘low reserves’.

Council’s Cabinet member for Corporate Graham Turner made the statement to a virtual meeting of the Corporate Scrutiny Panel last week.

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He said: “The main priority this coming year is how we sort the council’s finances out.

Councils Cabinet member for Corporate Graham TurnerCouncils Cabinet member for Corporate Graham Turner
Councils Cabinet member for Corporate Graham Turner

“There’s been a huge drain.

“So far we haven’t received the total amount of money we’re likely to have spent before the end of the year so we’ll be pressurising Government for some more money. Under current plans we’ll probably run out of money by the end of the year. That’s not a position we want to be in.”

Finance chiefs have forecast the financial impact of the coronavirus on Kirklees to be anywhere from £34m to £65m.

The range of the figures reflect ‘the fluidity of emerging Government measures’ to mitigate the spread of infection, and the subsequent timing of easing of social distancing measures.

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Of the £3.2bn allocated nationally to date to the local government sector, Kirklees’ share was £24.3m.

The challenges presented by Covid-19, which ramped up costs and slashed revenue streams, means the authority faces a struggle in 2021/22.

The imponderables include the level of local unemployment, the state of the local economy, Council Tax revenue and the level of defaulted payments.

And in terms of the health emergency, no-one can be sure if or when a vaccine will become available.

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“One of the problems we’ve got is that there is still a lot of unknowns," said Coun Turner.

“Next year is going to be the real problem.

"I think we’ll get through this year. But the next financial year will be a real challenge because some of the things that are developing now will have got worse by then.

“Unemployment will have peaked by next year. All those impacts will be coming through so next year’s budget will be a real challenge for us.”

In Kirklees the end of the furlough scheme, and resultant redundancies, could lead to an increase in claims for Council Tax reductions.

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The “consequential impact” on the Band D Council Tax base could be more than £4m.

And a 1% reduction in income due to arrears by people being unable to pay their Council Tax could cost around £2m.

Tax income loss is forecast at £11.1m.

Budgeted income from fees, charges and sales in 2020/21 was £52m. The closure of car parks and operations such as leisure centres and swimming pools means this figure will not be achievable.