Cardiff Council's £29m COVID-lockdown bill


Responding to the Covid-19 outbreak could cost Cardiff Council £29m in additional spend and lost revenue in the first three months of the financial year a report has revealed.

A statement from Cabinet to Cardiff Council has laid bare the expense involved in dealing with the effects of the virus.

The authority estimates it will spend more than £18m responding to the crisis and a further £11m could be lost in income by the end of June, 2020, as a direct result of COVID-19.

The £18m COVID-related spend includes, but is not limited to:

        The procurement of Personal Protective Equipment (PPE) to support the ongoing delivery of Council services and the wider care sector

        The provision of emergency accommodation to support homeless people during the pandemic

        The continued provision of food / financial assistance to those entitled to free school meals, given  the closure of schools

        Support to domiciliary and residential care providers to reflect the additional costs of providing care during the pandemic

        Costs incurred to deliver widespread operational changes necessary to ensure the safe delivery of services, including waste disposal and the delivery of bereavement services

        The provision of supplier relief, paid in accordance with Government guidelines, in order to ensure service continuity both during and after the current Covid-19 outbreak.

Cabinet member for Finance, Modernisation and Performance, Cllr Chris Weaver, said: "Cardiff Council has reacted quickly to the crisis, changing the way we work, putting clear focus on maintaining essential services which deliver for our most vulnerable residents.

"Over the past two months our services have had to respond and adapt to the crisis as events continued to unfold. We have set up food operations ensuring people across the city who are shielding or in financial difficulty because of the virus will not go without food. We have changed the way our waste services operate to ensure kerbside collections are maintained while keeping our staff and residents safe.

"We have procured millions of items of PPE to ensure our services and the care sector can continue to operate. We have also worked closely with the care sector to ensure it can continue to operate in these difficult times, delivering a vitally important and valued service. Our school hubs have opened for the children of key workers and we have provided meals and cash payments for thousands of disadvantaged children throughout lockdown.

"Of course all of this comes at a cost and we have spent more than £18m ensuring the city continues to run and the most vulnerable among us do not suffer unnecessarily. Our focus has always been on ensuring the resilience of services critical to our COVID-19 response, doing everything we can to protect our most vulnerable citizens and our staff, and trying to halt the virus spreading."

The £18m additional expenditure is being kept under constant review, and is being updated regularly as further pressures emerge. These include assessing the financial impact of a significant increase in the number of applications for Council Tax Support and current work to establish effective ‘Contact Track and Trace' services locally as part of an all-Wales initiative.

Cllr Weaver added: "When we look at income we estimate that we will lose in excess of £11m as a direct result of Covid-19. Lost income during the lock-down includes the closure of the council's cultural and sporting venues such as theatres, Cardiff Castle, Cardiff White Water and City Hall functions. It also reflects a reduction in activity in other income-generating areas including planning, parking, moving traffic offences, trade waste, registration and school catering.

"As with expenditure, this estimate will be monitored closely and updated as required. Over time the assessment of further income streams will need to be analysed with the most significant being the potential for any impact on the collection of Council Tax this year. Every penny we take in Council Tax now is essential. It helps us maintain regular cash flow, which allows us to manage some of the expenditure and income losses we have seen."

The council hopes it will be able to claim back the additional £18m expenditure from Welsh Government through the Covid-19 Hardship Fund. This fund currently totals £110m and is for all local authorities in Wales to access. To date Cardiff Council has received £465,000 to cover Covid-related spend during the latter weeks of March.

The report says it is likely, however, that the current funding level announced so far will not be enough to cover all expenditure requirements at an all-Wales level, and any decision on whether income loss will be reimbursed by Welsh Government is yet to be taken.

Cllr Weaver added: "Welsh Government are working closely with local authorities, and we are submitting claims to them for Covid-related costs on a monthly basis.  Our submission for March was paid in full. We know, however, that only part of that month was affected by lockdown, and the costs in future months are much higher.  There is, of course, an element of risk regarding the ongoing recovery of costs. In particular, as current funding arrangements are confirmed to the end of June 2020 only. It's clear to us that the challenges we face and the money we are spending to deal with those challenges will extend beyond that.

"We are working now on the implications of moving towards what is likely to be a "new normal" as lockdown restrictions are eased and the recovery phase begins. Some services will need to be changed to accommodate social distancing rules and restrictions. In all of this we have to ensure the safety of staff and residents. There may be significant financial implications with income streams in particular likely to take a considerable time to come back to normal levels.

"Positive talks are ongoing between Welsh Government and local authorities. The position is constantly evolving in response to Welsh and Central Government announcements and further clarity is required on other funding allocations that have been made, including the £95m that Wales receives from the £1.6bn additional funding for English Councils announced on 18 April 2020. The work monitoring our budget for this year and ensuring vital services are funded will continue, as well as preparing for next year's budget and beyond. Although there is lots of uncertainty for all of us right now, we will continue to seek value for money, change the way our services work, and use our budgets to support vital services and the residents and businesses of our city during this crisis and in the years ahead."