Nottingham and its ‘great institutions’ are at risk of severe economic harm if the Government does not come good on its promise to compensate councils for COVID losses, a senior council figure has warned today.
The current best-case scenario is that the council will lose £56 million before the end of the financial year. It has received just under £20 million from the Government to date.
If this financial scenario doesn’t improve – or if it worsens – the council has today said it will have to look at ‘all aspects’ of spending, including on cultural institutions like the Theatre Royal and the National Ice Centre, both of which are owned by the council, and the Playhouse, which receives funding from the council.
As well as an increase in demand for services, the council has been hit by a reduction in income – from traditional sources like car parks and leisure centres, and also from more commercial ventures such as its trade waste service.
Warning of the dire impacts Nottingham could face, finance chief Sam Webster said today Nottingham is only at the start of the economic crisis, and that it would be significantly worsened – and lengthened – without Government support promised, but not fully delivered.
The Conservative-led Local Government Association currently estimates the budget shortfall faced by councils will add up to ‘at least’ £6 billion – almost double the £3.2 billion pledged by the Government so far.
Now, Nottingham Labour councillor Sam Webster, who represents the Castle ward and is the portfolio holder for finance, has said valued aspects of life in Nottingham are at risk.
Asked whether all aspects of spending would have to be looked at if the funding was not made available, Councillor Webster said: “Yes, definitely. There are things that are indirectly (affected by) Nottingham City Council as well, that people don’t necessarily associate with the council.
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“That’s the Theatre Royal, the Royal Concert Hall, that’s the National Ice Centre, that’s Nottingham City Transport, they don’t have our branding on, but they are Nottingham City Council, and those people work indirectly or directly for the council.
“We support lots of organisations with funding as well, like the Playhouse and the community and voluntary centre, a lot of the core funding for those services comes from the council, and in all of those areas we’ve got no choice if the Government doesn’t come up with the cash, to look at those things.
“Obviously we’ll always try to protect front line services, and the services that are relied upon by our most vulnerable residents, but nevertheless we have to look at every area because the funding crisis is now so severe.”
“We’re at the beginning of the economic fallout from COVID, and councils are needed more than ever, in terms of what our response can be for the economy.
“Unemployment is significant, people can see there’s going to be serious impacts on the economy for our residents, and councils need to have the resources available to regenerate our areas and get the economy back on track.
“The biggest cities outside London – the core cities – 25 percent of the UK’s economy is driven by those core cities.
“Now if the councils in those areas – in Manchester, Birmingham, Leeds, Nottingham – if the councils don’t have the resources they need, if they’re struggling to cope, and they can’t provide the local services that are needed, the investment and the vision for regeneration in the future to actually get out of the economic crisis it will make the situation worse.
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“That’s why it’s really important the response from Government is what they said it would be at the outset, which is to stand shoulder to shoulder with us and compensate us for the costs, otherwise instead of it being a short-term health and economic issue, it could well become a long term health and economic issue, which is not what we want.
“We remain hopeful the Government will stick to the clear pledge they made, but setting that aside we have to be sensible and make preparations for if that doesn’t happen, how will the council deal with the financial consequences, so we are looking at those options.
“We will have to look at all options to balance our books by the end of the year.
“It’s funding for Nottingham it’s not just funding for the council.
“When we talk about public services what we mean is the local library, the local park, the bus service, all of those things that make a place function and tick, and determine whether it’s successful and a nice place to live or not. It’s things people really value. It’s the beating heart of the city.
“It would be a terrible shame, it would be a kick in the teeth for Nottingham and a kick in the teeth to communities and key workers if the Government didn’t stick to its promise.
“Councils and key workers have stepped up to the challenge, so it would be a sad outcome if, from stepping up to the challenge and pulling out all the stops in a difficult time of crisis, if the result of that was impacts on people jobs, increased charges and reduction in services at a crucial time.”
Councillor Webster was also asked about the significant investments made by the council in Robin Hood Energy (RHE), and whether this made the council more exposed financially.
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He said: “RHE doesn’t really come into the equation, all councils are going through these enormous challenges.
“The loss of income and the additional costs, which make up the £56 million, and the lack of compensation from the Government, they’re nothing to do with RHE.
“You can have a debate about RHE, but it’s a different matter. These issues still need to be dealt with.”
Asked whether he thought any options should be taken off the table for the ongoing strategic review of RHE, he replied: “I’m not sure, I don’t believe there’s any option we wouldn’t consider, we’ll look carefully at what the outcomes of the review are and the recommendations that are made.
“We will look at the review with an open mind in terms of the best next steps.”
A spokesman for the Ministry of Housing, Communities and Local Government said: “Council workers are the unsung heroes as we tackle this pandemic and we’re giving councils an unprecedented package of support, including £3.2 billion emergency funding, to tackle the pressures they have told us they’re facing.
“Nottingham City Council has received more than £19.82 million of this to deal with the pressures of coronavirus, while their core spending power rose by a combined total of £17.62 million this financial year even before additional emergency funding was announced.
“We will continue to work closely with councils as they support their communities through this national emergency and we are working on a comprehensive plan to ensure councils’ financial sustainability over the coming year.”
A council review of the funding implications is currently being carried out, and is expected to be published at an emergency executive board meeting in the coming weeks, before a more detailed action plan is published, possibly at the start of July.