Budget deficit back in danger zone after brakes put on leaving lockdown and concern UK government money will fall short
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A major report updating the members on the current state of Highland Council’s deficit had to be withdrawn at the last minute due to changes in Westminster and Holyrood.
A meeting of the full council agreed to hold a emergency meeting within 10 days and to schedule a members' briefing on the situation.
The report that was due to be presented was undermined after First Minister Nicola Sturgeon applied the brakes to the lockdown process and concerns that hoped-for funding from Westminster now looks unlikely to materialise.
In further developments, finance secretary Kate Forbes wrote to Chancellor Rishi Sunak calling for greater flexibility for councils to borrow to offset their deficits this year – a move supported by the Convention of Scottish Local Authorities (Cosla).
Chief executive Donna Manson announced that she would like to see the item on the budget update withdrawn, that there should be both a members briefing and an emergency meeting of the full council within 10 days.
Mrs Manson said: “I would seek support to meet with the group leaders and the convener on Monday morning as a priority to discuss the implications for the council and the changing context within which council services will be operating .
“There is also information I have recently received which have substantial financial implications – which could impact upon your decision making and delivery of key services for your residents.
Executive chief officer for finance Liz Denovan said: “Members, if I had the information that has come to light in the last few days I would not be making the recommendations before you [in the report].
“The statement from the First minister is that the R-number continues to rise, and we can see that conditions have now been changed taking us back in the journey of lockdown.
“Any change in this situation means that it is even more unlikely that the budget gap presented is the likely outcome for this financial year with a larger deficit expected.
“The latest information from the directors of finance is that we are unlikely to receive a sum anywhere close to the £12 million required from the income recompense scheme.
“The letter from Kate Forbes is seeking powers for local authorities to borrow but without additional funding coming forward from the UK government, it is now extremely unlikely that we will receive any further grant funding to meet the budge gap.
“However, the Scottish Government’s approach to the UK Treasury is also potentially very helpful. If successful, it could provide the council with further resource and greater certainty on which to base decisions. It is my recommendation that we need to allow time for this approach to the UK government to make progress.”
A Scottish Government spokesman said: “Councils have played a crucial role in supporting local communities throughout the pandemic. To date, the Scottish Government has committed £379 million of additional funding to local government for COVID-19 measures, on top of the local government finance settlement of £11.4 billion from this year’s budget.
“We have welcomed additional COVID-related funding received from the UK Government to help councils meet their extra costs but this is not enough.
“Together with COSLA, we are calling for a package of financial flexibilities for councils to help get them through this crisis. These flexibilities will be vital to protect local services and ensure our councils remain financially sustainable.”
