Stark warning as coronavirus effect causes £23 million budget gap
‘Large scale cuts’ could be on the horizon for Merton Council as it faces a budget gap of more than £23 million.
A stark warning was made at a cabinet meeting on Monday (September 7) that cuts will have to be made if the council does not receive additional funding from central government.
Cabinet member for finance, Councillor Mark Allison, revealed that the council has so far spent £26 million over the allotted government funding on the Covid-19 pandemic.
This is nearly a quarter of the £99 million it receives from council tax annually.
Councillor Allison said: “I do have to warn everybody that what the business plan is talking about now is unprecedented cuts in the future if the government does not provide the funding.
“These future savings in the next year are five times greater than we had anticipated before the pandemic, I think these are the biggest gaps in our funding we have ever had as a council.
“There may be cuts to the council on a very large scale and those may increase if in future years unemployment increases.
“Unless the government fully funds the cost of all the frontline services we’ve provided throughout the pandemic there are going to be very significant cuts to services in Merton.”
The financial strategy from 2021 to 2025 shows that the council is forecasting a budget gap of 3.3 million in 2021/22 and 6.9 million in 2022/23.
Councillor Allison said that this year the council is has managed to reduce costs by £3 million by the beginning of the next financial year but will need to find £23 million from elsewhere.
And director of corporate services at Merton Council, Caroline Holland, made it clear that a lot could change in the coming months adding even more pressure to the already stretched budget.
She said: “This budget gap is very much linked to the recovery of the economy and how successful we are in dealing with a second wave.
“We have more than 30,000 residents who have been furloughed and we do not know how many will have jobs at the end of the furlough scheme.
“There could be impacts on our council tax support scheme, the local economy, our businesses which could have an impact on business rates.”
The council has £113 million of debts, the majority of which is through loans of a fixed term of more than 15 years.
A report published in February shows that the borough has significant reserves, ranked the 13th highest in London with £48.106m earmarked as reserves.
Tara O'Connor, Local Democracy Reporter
September 8, 2020