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Council to set out dire assessment of financial situation


By Scott Maclennan

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Highland Council will on Wednesday set out a dire assessment of its financial situation showing that a potential budget gap of almost £100 million due to Covid-19 can only be plugged by a Scottish Government bailout.

The corporate resources committee will hear that the council has been left with a bill of almost £800,000 for childcare for key workers, while a second lockdown has also been factored in to the planning.

Official papers reveal that a huge fall in income has been blamed for the budget gap and previously leading councillors have said they would have to rewrite the budget. The situation has grown so serious they say that it is now no longer possible to present a balanced budget to councillors so alternatives must be found.

Two tentative scenarios have been mapped out. The first – the more optimistic one – has a budget gap this year of £67 million if the lockdown ends later this month, followed by a second lockdown between October and December leading to a slow recovery.

The second is a “worst-case scenario” where the lockdown becomes the new normal, with Covid-19 response activities required to increase and continue throughout the rest of the year – this would lead to a projected cost of at least £97 million.

To balance the budget the local authority is planning to lobby the Scottish Government for more funds but even that avenue may not be possible.

The papers state: “The only real way for income to increase significantly is if additional funding is provided by government.

“While some income has already been provided, some specific to meet new expenditure costs and others for more general purposes, it is expected that significant further government funding may be needed to balance the council’s budget.

“Given the impact of Covid-19 on the national economy it is unclear at this stage whether the government will be able to afford to inject further funds into local government.”

Adding to the financial woes is an estimated £38,000 per week bill to provide childcare for key workers, with £185,000 spent on that already.

If there is no government support to pay for the places that have already been commissioned until the end of the summer holidays, the total minimum cost is estimated at £799,235.

Councillor Mackinnon said: “The budget gap could be up to £97 million. I’d like to highlight that because it is a huge uncertainty how the impact of Covid will be felt for the rest of the year. What we do know is that it will be significant.

“What is extremely challenging and very risky is the income from council tax fees and our charges income.”

The depute leader, Councillor Alasdair Christie, is heading up the recovery board. He said: “Some of the budget savings we thought we would make we will not be able to make due to diverting resources onto Covid-19, so we have got the budget gap caused by Covid-19 to recover.

“We cannot rewrite the budget. When we meet at council in June we will be presenting a situation that shows a budget gap – we do not have the wherewithal or resources to present a balanced budget in June due to the pandemic.”


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