Financial Sustainability of Local Government as a Result of the COVID-19 Pandemic
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Some councils were better placed than others to deal with the significant financial impact of the pandemic
Against a backdrop of existing funding pressures, the financial costs of the COVID-19 pandemic are unprecedented in modern times.
Local government funding in Wales has been under significant pressure for over a decade, following the financial crisis in 2008-09 that triggered a severe worldwide recession.
Whilst the impact of COVID-19 so far has been mitigated by Welsh Government financial support, the future sustainability of the sector is an ongoing challenge.
Welsh Government has made nearly £500 million of additional funding available to councils through the local government hardship fund as well as making some other funding available including for example in relation to extra funding for teachers for catch up support from education and cleaning materials for schools. This has mitigated local councils’ additional costs and income losses to date, but depending on the future course of the pandemic, there may still be a significant funding shortfall for local authorities during 2020-21.
The biggest areas of increased cost pressures across Local Government so far are in social services and education.
Councils receive income from a range of services including leisure facilities, car parking, school meals and school transport, but the largest estimated income losses are in leisure and cultural services.
It is clear that the financial impact of the pandemic is likely to continue throughout 2020-21 and into future years.
Our future work – supporting financial sustainability and recovering planning
Over 2020-21, in keeping with our commitment to support public bodies’ response to the pandemic, we will work with councils to gain assurance that they are putting in place proper arrangements to secure financial sustainability.
We will gather and share real-time learning and practice across the public sector.
You can view some of our existing COVID-19 work on our web page.