Cardiff Town Hall

Cardiff council faces bill of almost £29m due to Covid

Councillors ‘hopeful’ for support from Welsh Government, but finances remain uncertain as pandemic continues

COVID is likely to cost Cardiff Council almost £29 million over the next six months, according to the latest budget review.

So far, the Welsh Government’s Local Government’s Hardship Fund has covered £25 million of the council’s Covid-related costs up to August.

This includes over £4 million on free school meals, £5.5 million on personal protective equipment and almost £8 million on adult social care.

The Hardship Fund also covered lost council income resulting from the pandemic, including £3.5 million lost from parking tickets and fines.

Despite this financial aid, the budget review estimates that Covid added nearly £2 million to the council’s overspend.

In August, the Welsh Government announced a £260 million package for local authorities.

However, the budget review states that there remains “a significant degree of uncertainty” regarding what the government will cover.

The review’s estimated cost of the pandemic for the council over the next six months is £28,886,000.

Although it is unlikely the council will have to pay all of this, the review emphasises the “significant impact” the government’s funding decision will have on the council’s finances.

Covid measures – and their financial implications – are likely to be here for some time

Labour councillor Chris Weaver, cabinet member for Finance, Modernisation and Performance, said: “The Welsh Government has agreed with councils a system where we claim the costs incurred and the lost income related to Covid-19 and that has worked very well.

“We need that to continue and will continue to work closely with the Welsh Government on ensuring that the costs are covered.”

Other council members are less optimistic.

Conservative David Walker, chair of the Policy Review and Performance Committee, said the council are “hopeful to get every penny they’ve asked for from the Welsh Government”.

However, he fears that because the council has spent most of its contingency funds, it will have to rely on reserves until March 2021.

He emphasised that although the committee had been less critical of council budget policy than usual due to the pandemic, there remained areas for concern. 

In particular, areas such as social care consistently overspend on an annual basis.

The social services directorate is currently facing an overspend of just under £3 million – the budget review attributes this to underlying issues rather than Covid.

Coun Walker stressed the need for “strong financial discipline and prompt management action” to reduce overspends.

He also said that the “main savings so far are down to inactivity due to reduced service activity during lockdown.”

It is therefore difficult to assess how successfully savings targets had been met.

Currently, the council expect to fall over £4 million short of their target annual savings of £8.5 million.

Until the Welsh Government clarifies what it will and will not cover, the implications of these financial pressures remain unclear.

However, Cardiff Council’s Local Development Plan, which sets out the council’s long-term vision for the city, is currently under review.

Affordable housing, high-street retail and planning schemes and obligations are all predicted to be impacted by the pandemic.

“The costs and lost income we expect over the next six months are significant, and we need Welsh Government’s support to continue to meet those, but it is very positive that Welsh Government have committed support throughout this financial year,” said Coun Weaver.

“There is still a risk, but because of that support I believe we will be supported through this financial year.”

  • Cardiff Council Cabinet is due to discuss the budget review on November 19.