Coronavirus: Thousands of jobs at risk in St Helens

The grim reality of the financial impact facing St Helens has been outlined in a new report due to go before the local authority’s cabinet next week.

St Helens Borough Council says local authority finances will be placed in a “perilous position” without significant government intervention.

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The council estimates it will face additional cost pressures and loss of income of £36 million as a result of the pandemic, based on a six-month timeframe.

Factoring in the £11.4 million the council has received in emergency funding from the government to date, that leaves a funding gap of £24.6 million.

St Helens Council warns in the report that, without the necessary levels of government funding, the size of the funding gap emerging means it will need to make some “really difficult decisions around service provision”.

“COVID-19 is the biggest challenge the UK, and local authorities, have faced for many generations and it is clear that the pandemic provides an even greater risk to St Helens and the Liverpool City Region (LCR) than it does to the rest of the country,” the report says.

“The council was encouraged by the government’s promise to do ‘whatever it takes’ to support the nation through the crisis and its stated commitment to work with local authorities in doing so.

“The council is extremely proud of how it – alongside partners and communities – has mobilised in response to the pandemic and continues to stand ready to do ‘whatever it takes’.”

Next Wednesday, St Helens Council’s cabinet are expected to agree to progress work on an emergency budget for 2020/21, in light of the extraordinary events of the past three months.

This will be aligned with the council’s reset and recovery phase of its coronavirus response, and will see all council services placed under review.

The report that sets out the case for emergency budget warns that councils that are unable to deliver a balanced budget will have to issue a Section 114 notice, which is essentially a declaration by a local authority that it has no money and cannot continue to operate.

“The loss of income from fees and charges and other streams as a result of the pandemic, as well as the prospect of reduced income from business rates and the non-payment of council tax will place local authority finances in a perilous position without significant government intervention,” the report says.

“The financial challenge the council faces not only puts the response and other service delivery at risk, but also damages the prospects of a swift recovery.”

Current projections carried out by the combined authority estimates that St Helens will face the second largest economic slowdown in the city region.

These projections predict 39 per cent decline in output, placing more than 25 per cent of all of St Helens’ jobs at risk.

This will, in turn, damage the local economy and the council’s revenue streams.

“Future anticipated losses in income will arise in the event of business failure and loss in business rates income as the economy shrinks, whilst the impact on residents’ ability to pay council tax will be considerable,” the report says.

“This a very difficult area to forecast until there is greater future certainty.

“A sum of £7 million has been included in the most recent forecasts and will be refined as evidence becomes more available to support the actual level of losses experienced.”

St Helens' economy is expected to take a significant hit in the wake of the coronavirus crisis

As part of the Budget speech in March, the Chancellor of the Exchequer announced the creation of a £500 million Hardship Fund to provide council tax relief for economically vulnerable households.

St Helens was allocated £1.906 million.

Several grant schemes, such as the Small Business Grant Fund (SBGF) and the Retail, Hospitality and Leisure Grant Fund (RHLGF), have also been created to support businesses during the lockdown.

Despite all of the support provided by the government over the past three months, local authorities are still warning that it is nowhere near enough.

Across the city region, it is estimated there will be a £240 million funding gap, with the emergency cash from government covering 26-35 per cent of the estimated financial costs.

In May, political leaders across the city region sent a direct letter to the Prime Minister, backed up by a detailed paper entitled ‘The Case for the Liverpool City Region’, calling for fair funding.

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As it moves into the next phase of its coronavirus response, St Helens Borough Council says it shall continue to lobby the government to provide clarity around the extra funding that is “desperately required.”

“The future impact upon the local economy is very uncertain,” the report says.

“However, the fact remains that the longer the pandemic goes on for, the greater the impact will be, and the greater the intervention by local authorities will need to be to assist businesses and individuals to return to normality.”