NI councils facing ‘probable’ collapse as pandemic wreaks financial chaos

The chief executive of the Northern Ireland Local Government Association, Derek McCallan, said that without intervention from central government “institutional collapse” for the 11 local councils here is “a probability”.

Nearly a quarter of the total £900 million local government budget is likely to be wiped out by additional costs and the economic downturn associated with the pandemic, Mr McCallan told the News Letter.

The council budgets have been impacted by the loss of income from leisure centres and other venues, increased waste removal costs and what Mr McCallan said is likely to be a drastic cut in rates income due to the wider economic downturn associated with the coronavirus lockdown.

“It’s facing the entire local government sector in Northern Ireland,” Mr McCallan told the News Letter.

“Our focus at the minute is on avoiding the institutional collapse of the 11 councils.”

Asked whether the collapse of councils was possible without intervention from central government, Mr McCallan said: “Without intervention that’s a probability.”

He continued: “We’re looking at losses across the councils of £10.5 million per month from March projected through to the end of June. Principally that’s loss of income in places like leisure centres, sports halls, etcetera.

“The biggest sort of long-term issue we have is that inevitably there will be a reduction in domestic and business rates income. Now, the English councils are predicting 20-25% reduction. If that happens to councils over here that will be around £175 million in additional losses.

“We don’t expect, in terms of people’s responses to the phased recovery, anything like the events, leisure income, tourism, licensing (after any easing of the lockdown restrictions).

“All of the business of councils, direct or indirect, is going to be starved of income over the next year.

“It’s not sustainable without intervention.”

Mr McCallan called for financial support from central government.

“In Westminster, there has been the sum of £3.2 billion given to local authorities across the water,” he said.

“Now, the scale of what they do and the number of local authorities is massive. What we are asking for is a proportionate response for Northern Ireland.”

A spokesperson for the Department of Finance said: The funding provided to the Executive for the Covid-19 response is for the Executive to allocate in line with local needs and priorities.

“It should be recognised that local authorities in England are funded for a range of services which are carried out by central government in Northern Ireland.

“The Executive is currently examining how best to allocate funding.”