St Albans Council facing £3.6 million deficit due to COVID-19

The COVID-19 pandemic could result in a £3.6 million budget deficit for St Albans District Council this year,.

The estimated amount – a quarter of the total annual budget – could use up most of the council’s reserves. Action to save money is now being taken.

However, the budget gap could be reduced if a further government grant is awarded to local authorities to cope with the impact of COVID-19. So far, an extra £1.5 million has been given to the council in emergency funding.

Details of the council’s finances for 2020/2021 were given in a report to a meeting of the cabinet on Thursday, June 25. It said the impact of the coronavirus had been “enormous”, with the council suffering a drop in income of £150,000 a week since the lockdown in March.

Most of this stemmed from a slump in revenues from car parking services. All other income from planning fees, leisure centres, museums and other activities has also been severely affected.

Councils across the country were experiencing the same difficulties with the Local Government Association saying an extra £6 billion will be needed for their pandemic costs.

The government has so far provided £3.2 billion, with district councils such as St Albans sharing £223 million of that. However this sum has only covered 47 per cent of its £472 million of additional costs.

A series of actions is already being taken by the council to try and save money. These include reviews of all spending commitments, staff recruitment and the hiring of temporary or agency workers.

Cabinet also agreed to postpone for nine months the implementation of new pay grades for some staff that were due to come into force the summer. This recommendation will be put before a meeting of the full council later this year.

Cllr Karen Young, portfolio holder for resources, said after the meeting: “Although the lockdown is easing, we expect it will be quite some time before the local economy returns to normal.

“In common with Councils nationwide, as well as many businesses and other organisations, we are being hit very hard financially and that is likely to continue.

“The government has provided some additional funding, but it still leaves us with a projected budget gap between income and spending of almost £4 million.

“That will be extremely challenging for us and it is to be hoped that we will get more Government help to deal with it.

“However, we are also taking immediate action to try and save money, including a review of new recruitment and spending.

“We will continue to actively monitor the impact of COVID-19 on our finances very closely and look for other ways of tackling the severe difficulties we are faced with on this front.”