A COUNCIL is facing a multi-million pound cash gap in the current financial year because of coronavirus.
Blackburn with Darwen Borough has a predicted deficit on its revenue budget for 2020/21 of £13.03million.
It is also expecting to be short of £8.7m in business rates and uncollected council tax.
Cllr John Slater, the leader of the council’s Conservative group said: “The council is technically insolvent.”
But Cllr Vicky McGurk, its Labour finance boss, replied: “It remains a going concern.”
She outlines the authority’s financial position in a report to tomorrow’s meeting of the executive board of Blackburn with Darwen Council.
It says: “The Covid-19 pandemic has resulted in significant unplanned expenditure and income losses.”
It reveals the council has had to spend an extra £14m as a result and lost income from commercial sales, fees and charges of £11.3m.
This total loss of £25.3m had been offset by £10.9m in coronavirus grants and £1.37m towards the costs of local testing and tracing leaving an overall shortfall of £13.03m .
Cllr McGurk said that current projections for the business rate and council tax collection were a deficit carried forward into 2021/22 of £7.5m for the former and £1.2m for the latter ‘which would be a pressure on the 2021/22 budget’
Her report adds that the council holds £34.586 in earmarked reserves and £7.689 in unallocated reserves against a target minimum of £4m. It adds that the government is considering further grants to offset the costs of Covid-19.
Cllr McGurk said: “The council is solvent. It remains a going concern. We expect to be able to reduce the £13m deficit and can cover that from reserves. However in the long term that is not sustainable. The council needs extra financial support from the government.”
Cllr Slater said: “The council is technically insolvent as its debt is greater than its assets. It has received money from the government and it cannot treat the government as a cash cow. It seriously needs to look at how it operates as it has done so much wrong. It needs to cut its costs to meet the current financial situation.”
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