Ealing Council’s cabinet has agreed to introduce strict and wide-ranging controls on spending as it seeks to balance its budget in the wake of the COVID-19 pandemic.
The council is currently facing a budget gap of £39million arising from its work to contain the spread of COVID-19 in the borough. Before the lockdown it was forecasting a separate £12million unfunded financial pressure; much of this arising from a projected increase in the support the council is required to give to local children with special educational needs.
Added together, the two give an estimated in-year total pressure of £50.6million.
Local authorities have led the way in meeting the unprecedented challenges that the COVID-19 pandemic brought, and the government committed to give them the resources they needed to do the work. Ealing’s COVID bill amounts to £65million but, despite their promise, the government has allocated just £26million to Ealing so far, leaving £39million outstanding.
Following recent government announcements, some further funding is expected in the future, but not enough to close the £39million gap.
By law, the council must deliver a balanced budget. Failure to do so will result in the issue of a s114 notice leading to a ban on all new spending, except for safeguarding vulnerable people and statutory services. This is an action of last resort and is only issued in the most serious of circumstances when the council’s chief financial officer considers the council’s financial position to be unsustainable.
Ealing strict new spend controls, including a recruitment freeze and a stop on new spend commitments are part of the council’s actions to produce a balanced budget. while it, along with other local councils, lobbies central government for the rest of the promised COVID funding. The council will also be taking another look at its contracts with suppliers to see what savings can be made, on top of the £2.3million it had already identified this year as part of its budget savings programme.
The council currently holds £23.7million in non-ringfenced financial reserves. The council keeps money back in reserve so that it can deal with emergencies and mitigate against any forecasted risks, such as increases in demand in homelessness. If the council was to spend its reserves on part meeting its COVID-19 costs, it will be in a weakened position; unable to respond adequately to situations such as floods and fires, or unforeseen spikes in demand.
Councillor Bassam Mahfouz, cabinet member for finance and leisure, said: “This is a serious situation for local government and we have borne the brunt of more than a decade of cuts to our government funding. In Ealing alone, our government grant has been cut by £143million and now get just one-third of what we were given in 2009.
“Through prudent financial management, and our Future Ealing transformation programme, we have managed to deliver balanced budgets that still deliver vital services year after year. Our residents are central to this and have stepped up to play their part in keeping the borough clean, keeping libraries open and helping their vulnerable neighbours. Unfortunately, the government has left us with a huge COVID bill that we will struggle to pay.
“As well as taking care of residents during the pandemic, we’ve also worked hard to keep local businesses afloat and have paid out upwards of £70million in business grants making us one of the top performers in the country. But, despite our efforts to protect residents and businesses, the critical services that so many rely on are being put at risk.
“Ealing is a responsible and well-managed council so we are putting these controls in place while we continue to ask government to keep their promise and pay their bill, but there will be tough times ahead.”
Residents can find out more about the council’s COVID financial gap and how they can help the council in asking the government to keep its promise at www.ealing.gov.uk/keepyourpromise.