Merton Council facing unprecedented budget shortfall as a result of the Covid-19 pandemic

Merton Council has issued a stark warning to the Government that, unless it fully funds the cost to the council of providing frontline services through the pandemic, there will have to be serious cuts to local services.

Figures published by the council’s Cabinet this evening (Monday 7 September) warn that from April 2021, the council will need to prepare to make unprecedented cuts. These savings are bigger than for any “next year” in the council’s history and five times greater than had been anticipated before the pandemic.

Covid-19 has already cost Merton Council £26million more than the Government has given the borough.

This amounts to more than a quarter of the £99.5million the council receives through council tax each year.

Despite all the business-like measures the council has put in place, including reducing other budgets by £3million this year, there remains a shortfall of £23million this financial year, and unless this is forthcoming, the council will be forced to make substantial cuts to services in future years.  

The council is also warning these cuts may increase if more residents, facing furlough or unemployment, can no longer pay their bills, or if companies struggling to continue trading cannot pay business rates.

Although the Government has indicated that further discussions will be held about additional support for local authorities, the council’s cabinet member for finance and deputy leader, Councillor Mark Allison, has warned that time is running out, as Merton begins its 2021/22 budget setting process next month.

Councillor Allison said: “We are trying to take a business-like approach to our finances but residents should know we face an unprecedented budget gap, which will put all council services at risk of cuts if the Government does not cover the full cost of the pandemic.

“We are very disappointed that, after our staff have worked so hard to protect residents and provide essential services – even though this has put them at increased risk of contracting Covid-19 – the Government has only covered a fraction of extra costs.

“The council has spent years ensuring Merton is a great place for families, and our top priority remains to protect residents, control the outbreak and save lives. But if the government do not protect our finances, we will not be able to protect services.

“Our staff have risked everything to stop the virus and are doing all they can as we go into winter and face a possible second wave. Now that we have reached the point when budgets need to be calculated, we need the Government to do the right thing and protect Merton’s services.”