THURROCK Council’s deficit has risen by more than 500 per cent in just seven months due to the massive economic impact of Covid-19.
Council papers have revealed that in February the council was expecting to have a funding gap of £5.5million over the next four years but that has now risen to £33.6million – an increase of £27.4million.
It is claimed the reason is “reductions in locally raised taxes, increased costs – especially around social care resilience – and expected reductions in fees and charges” caused by the Covid-19 pandemic.
It is also down to the council’s decision to pause some of the it’s major capital projects, which are linked to improving infrastructure.
That pause of capital project is said to make up £11million of the total deficit and is said to have taken place due to “new investment market opportunities reducing” and to give additional time for funds to be raised for the council-owned development firm, Thurrock Regeneration Limited.
The forecast budget deficit for next year alone is £19.3million.
There are further fears this will grow by another £1.5million in the coming months. This is due to financial risks linked to instability in residential care homes, as well as a potential spike in homelessness when the landlord eviction ban is lifted and the need for changes to school transport due to social distancing.
The papers, published ahead of a cabinet meeting next, go on to note the council’s theatre income may also be hit should the pantomime season not be able to go ahead.
Thurrock recently came under heavy scrutiny from opposition councillors and the media over its short-term debt which has reached more than £1billion and is set to grow to more than £2billion over the next five years.
Most of this debt is the result of a strategy to borrow from other councils and invest the cash into renewable energy projects outside of the borough.
The council says the return income is then invested into services.
Thurrock Independent councillor Garry Bryne said during a meeting in July this strategy is a “beautiful thing” where “you take a pot that belongs to someone else and you end up with a bigger pot, which is yours”.
However, the debt created through this strategy does eventually need to be paid off.
The council report notes that the “existing investments have continued to perform as anticipated despite Covid-19” and states they have helped deliver improved services for residents.