Essex County Council predicts shortfall of £14m due to coronavirus crisis

Essex County Hall in Chelmsford. Credit: ITV News Anglia

Essex County Council could be facing a shortfall of £14m due to the impact of the coronavirus pandemic, new research has found.

The analysis by the media industry's shared data unit found many councils may have to declare themselves effectively bankrupt unless the government steps in to help.

The investigation found that councils are under intense pressure because of the increased costs of supporting vulnerable people, while income from fees and rates fell.

Councils are also not receiving their usual income from things like leisure centres which remain closed, while tourism is normally a big money-spinner as well.

In total, the shared data unit contacted 173 local authorities, with 148 of them predicting a deficit.

Out of all the councils who responded to the request, Essex initially predicted a £171m shortfall, with only Birmingham, the largest authority in Europe, forecasting a bigger one (£212m).

However, the council say that figure was estimated at the height of lockdown and they now believe they are more likely to be looking at a deficit of £14m.

“The Government has helped councils but in Essex their support means that only £6 in every £7 is covered, so we have a very real challenge," Cllr David Finch, Leader of Essex County Council, said.

“However, Essex County Council has some resilience, with healthy reserves set aside to help manage crises."

Luton Town Hall. Credit: ITV News Anglia

Luton Borough Council is also anticipating a shortfall of £49 million - largely thanks to the absence of passengers at Luton Airport since the start of lockdown.

The council owns the airport and relies heavily on its income.

At this stage, the council is not considering any emergency spending controls, known as as a section 114 notice, but "unprecedented" cuts to key services could have to be made soon to save money unless the government offers more support.

"Unless the council’s desperate plea to the government for immediate cash is successful, councillors will have no option but to agree to unprecedented in-year cuts to key services which will be keenly felt across all the town’s communities," a Luton Borough Council spokesperson said.

"With aviation passenger numbers catastrophically impacted, the council’s airport company, London Luton Airport Ltd, is no longer receiving air passenger income which makes it impossible to pass on dividends to the council which it relies so heavily on to fund many vital frontline services."

Just over £3.2bn has already been dished out to English councils in two separate government pots.

Predicted council shortfalls

  • Essex - £14m

  • Bedford - £30m

  • Cambridgeshire - £13m

  • Hertfordshire - £17m

  • Luton - £49m

  • Milton Keynes - £44.5m

  • Norfolk - £20m

  • Northamptonshire - £27m

  • Peterborough - £7.3m

  • Southend - £9.5m

  • Suffolk - £20.1m