Council must save £38m – even before COVID-19

WARRINGTON Borough Council will need to make savings of £38 million over the next four years – even before the impact of the COVID-19 pandemic is taken into account.
Of this, £21.6 million savings will be required next year, according to a report to be presented  to the council’s cabinet by deputy leader of the council, Cllr Cathy Mitchell.
Of the £14.1 million saving already agreed for the current year, £8.1 million is identified as “unachievable” with the additional £6 million at risk of further delay as a direct result of the impact of COVID-19.
The report adds: “This creates additional financial challenges for both current and future years as performance in the current financial year has an impact on the financial baseline for subsequent years. These figures are estimated as at June 2020 and have been reflected within the council’s financial returns to central government as a real financial pressure arising from the impact of COVID-19.”
Over the four year period, government funding is expected to be minimal.
From from next year, no further Revenue Support Grant funding is expected and it is expected that New Homes Bonus funding will progressively reduce to nil over the period.
Funding is expected to come largely, if not wholly, from locally determined sources, such as, council tax, business rates and inflationary increases in fees and charges.
The council currently has reserves which could be diverted to meet a one-off COVID related overspend, however further government funding would be needed before the end of the current financial year to avoid depleting all available reserves, the report continues.

“This would leave the council in a difficult financial position, with an increased risk profile and could put future years’ budget plans at risk unless reserves could be re-established.
In addition, council tax collection locally could be impacted by up to £6.6m in the current financial year and business rates by up to £1.6m.
The pandemic has led to forecasts of a global recession which will last about two years and which will have an impact on the authority.
However, it is hoped Warrington’s diverse economy may shield it from some of the worst effects of the economic fall-out. The logistics sector has performed strongly throughout the pandemic as UK customers have increased their take up of internet shopping. Omega is home to a large cluster of logistics companies and a current inward investment in food distribution could bring another 1,000 jobs to the area. In manufacturing, the industry body Make UK has reported the worst economic impact for 30 years, however the sector share of the local economy is only 7 per cent, compared to 13 per cent nationally and 22 per cent for Cheshire and Warrington.
The nuclear sector at Birchwood typically operates with long term government contracts (eg 25 years) so should also avoid the worst of the downturn.
Nevertheless, Warrington residents will be affected, particularly those who travel outside the borough for work.
Nearby Bentley are making 1,500 staff redundant with 1,600 at risk at Airbus. Jaguar Land Rover and Vauxhall will also be losing workers as the automotive sector will take some time to recover.
As a result, unemployment has more than doubled in Warrington to 4.6 per cent (5,995 claimants) and with 24,500 currently furloughed, this is expected to rise again when the scheme ends in October.
This is especially concerning in retail (11,000 employed), food & beverage (6,000) and accommodation (1,200) where the worst effects of the lockdown have been felt.
Dealing with the council’s property portfolio, the report says the council receives £33m a year – 90 per cent of which is from the new investment portfolio acquired since 2016, which includes Birchwood Park.
This new investment portfolio has proved robust to the pandemic and is well placed to continue to deliver a net income to the council through the economic global recession now expected.