Councils face 'long-term and ongoing' pandemic challenges

by Michael McHugh, PA

Future spending plans could be in jeopardy as local councils face a “long-term and ongoing” impact from the coronavirus pandemic, a watchdog in Northern Ireland has said.

Unprecedented challenges will continue from virus restrictions, which damaged leisure revenue streams while requiring emergency action to maintain safety, local government auditor Pamela McCreedy said.

Her annual report warned the cash position could affect future capital expenditure plans, such as building new facilities, as well as day-to-day running costs.

The Communities Department has already paid millions of pounds to the authorities to prop up local services and it is very likely they will also have to dip into their financial reserves, the auditor said.

Her report added: “Councils have faced unprecedented challenges related to Covid-19 which will continue as they deal with both the immediate and longer-term repercussions of the pandemic.

“There has been a significant financial impact related to decisions made by councils in order to maintain public safety, particularly during the emergency response to the pandemic.

“There is likely to be a long-term and ongoing impact on the economy and public sector finances, however the full extent is unknown at this stage.”

In May, the Communities Minister announced that the Executive was allocating £20 million to councils to assist them with their financial pressures up to the end of June this year as a result of Covid-19.

This funding was to allow them to continue to provide essential services such as waste collection and disposal, registration and cemetery services and to support those in need.

An additional £40 million was announced in September 2020 to support the operation of the 11 councils.

In October 2020, the Executive allocated a further £15 million to councils to ensure that they continued to positively contribute to the response to and recovery from Covid-19.

Many staff were furloughed due to restrictions on service provision.

The local government auditor added: “Whilst some services have resumed, continued restrictions will impact on the ability to fully resume service delivery and income streams, particularly those from leisure and tourism, will continue to be significantly impacted.”

Looking ahead, the report said, councils face a wide range of challenges and opportunities.

“Some councils already have a significant amount of underlying debt and so the impact of any additional loan commitments needs to be considered carefully, in light of councils’ ability to meet repayments, the impact on cash available for service delivery and the effect on councils’ net debt position.

“Given the ongoing financial challenges arising from the Covid-19 pandemic, councils may need to reconsider future plans and commitments.”

In these unprecedented times, continuing to deliver positive outcomes will require strong leadership, effective governance structures and continued engagement both internally and externally, the report for 2020 said.

“This can be further enhanced through the development of effective partnership arrangements with other public bodies and local communities,” it said.