Covid-19 pandemic will ‘economically scar’ Sheffield Council as budget black hole widens

A bleak report says the council’s finances are in danger of “spiralling out of control” and unless firm action is taken, the authority will struggle to set a legal budget next year.

Covid is still causing significant uncertainty and the pandemic is creating a constantly evolving financial position.

Director of finance Ryan Keyworth said: “Hospitalisation rates have fallen substantially, and restrictions have been eased however, there are still risks of further waves of infections or new variants of concern.

“There is still no certainty on the eventual path of the pandemic, nor on the economic scarring it will leave behind.”

Social care is draining Sheffield Council’s budget

The council survived 10 years of austerity through “prudent management of finances” and now needs to focus on longer term priorities and regenerating the city centre.

The report adds: “A careful, pragmatic and balanced approach meant the council’s finances were in a relatively strong position at the start of the pandemic compared to many others.

“A balanced budget was set prior to the pandemic hitting. Covid related Government financial support has meant the council has not needed to draw on reserves to date.

“The council has identified up to £50m of one-off funds to meet the medium term costs of Covid, to transform services and to aid in the recovery of the city from the pandemic.

“By taking additional risk, it is possible that a further £20m could be released.

“These funds remain available, but these reserves are not spare. They will be needed to support the pressures that we know will arise over the next three years, unless other decisions reduce those pressures.”

Social care still remains a huge drain with demand outstripping income from council tax.

The council has pooled some budgets with health agencies which has helped and officers say the pandemic has at least thrown a spotlight on the need to give proper support to care services.

The next step is lobbying national government for more funding and directing more resources towards community care and prevention.