The financial impact of Covid-19 on Nottingham City Council is now estimated at around £86 million, the authority has revealed today.

Like councils across the country, this means severe consequences for Nottingham unless the Government delivers on its promises to provide adequate compensation for the costs of the pandemic.

The full scale of the financial challenge is set out in a report to the Council’s Executive Board, which will be discussed today (Monday).

The current estimates show that the financial impact, defined as lost income, increased expenditure and savings which can no longer be delivered, to be approximately £85.5m. 

To date, the Government has only provided around £19 million in Covid-19 support grant despite promises “to stand shoulder to shoulder” with councils to support them through the pandemic crisis.

This means that Nottingham City Council is facing a shortfall of £65 million and without adequate financial compensation from Government will, like many other councils across the country, needs to take severe measures. 

The impact of Covid-19 comes on top of a substantial and sustained reduction in Government funding over the past 10 years because of austerity policies.

Alongside this reduction in grant income, Nottingham has seen increased demand for a number of services, for example care for older people and looked-after children. In the period from 2010/11 to 2019/20, the Council has had to make cumulative savings totalling £271.4m because of Government funding reductions, and a further £15.623m of budget reduction measures were agreed within the 2020/21 budget.

Without additional funding forthcoming from Central Government, changes to local services will be inevitable if the council’s budget is to remain balanced in the medium term.

The Report to Executive Board will highlight current measures being taken to help to address the council’s financial position, including the extension of spending controls, the identification of in-year savings, while a voluntary redundancy programme has already been introduced.

However, this will be insufficient to cover the £65 million gap due to the costs of Covid-19. If Government support isn’t forthcoming, the report outlines scenarios that could include issuing a Section 114 notice, which means that the council cannot balance its budget. 

Nottingham City Council Portfolio Holder for Finance, Councillor Sam Webster said: “At the start of the Covid-19 crisis, the Government said they would stand shoulder to shoulder with us, but the funding they have provided so far doesn’t come close to covering the expenses incurred to tackle the crisis locally.

“We now estimate the financial impact of Covid to be around £86m, with only around £19m from Government so far.

“If Government doesn’t step in to help councils like ours, which have risen to the challenge and been at the forefront of keeping vital services running, protecting vulnerable people, ensuring PPE supplies get through to the frontline and doing all we can to help local businesses survive, then even more cutbacks will be needed quickly in order to overcome the situation.

“This isn’t all about money for the council. It is about money to help get our great city back on its feet again, for our residents, for jobs, for the key public services that people rely on and value. It is about adequate funding for Nottingham’s parks, libraries, elderly care services, public transport network, community centres and much more.

“It would be an utter betrayal of our key workers if, after all their immense efforts, the services they deliver were not properly funded by the Government.

“Thousands of frontline key workers who work either directly or indirectly for Nottingham City Council have risen to the Covid challenge over recent months. From care workers in residential care homes, to bus drivers, bin lorry crews, park rangers, officers in the meals-at-home service, Community Protection officers and many more have helped us all through this crisis. We couldn’t have done it without them.

“Throughout the public health crisis we stood and clapped every Thursday night to show our appreciation for these vital key workers, but now key workers employed by local councils up and down the country are being betrayed by a Government that promised to stand shoulder to shoulder with us.

“Our part of the country has already borne the brunt of austerity for the past decade, a period that never ended. Central Government austerity policies over the past 10 years have led to rising child poverty, rising council tax bills and cuts to local public services, and it is now proven that the poorest parts of the country have been most affected by Government spending reductions.

“The biggest regional cities in the country, the Core Cities, are the engines of UK economic growth. It is absolutely essential that councils in those areas have the financial firepower required to generate growth, new jobs, reimagine city centres and respond to the economic crisis that the country is now in. To do this, cities like Nottingham will need a new deal from Government.

“We will need investment, we will need more local decision-making powers, we will need to have the flexibility to plan for the future, and we will need financial stability.

“The Government must now honour the very clear promise they made to Nottingham and to other local areas across the country.”