Highland Council facing potential £100m budget gap due to Covid-19
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Highland Council will tomorrow lay out a dire assessment of its financial situation due to the Covid-19 emergency.
Local authority leaders will reveal a potential budget gap of almost £100m due to the pandemic which they say can only be plugged by a Scottish Government bail-out.
Corporate resources committee members meeting in Inverness will also hear that the council has been left with a bill of almost £800,000 bill for childcare for key workers while a second lockdown has also been factored into the planning.
Official papers reveal a huge fall in income for the council which has caused the budget gap.
Previously leading Highland councillors said they would have to rewrite the budget.
But the situation has now grown so serious they say that it is simply no longer possible to present a balanced budget to councillors so alternatives must be found.
Two tentative scenarios have been mapped out, the first 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 slower 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.
“Whilst 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.
Budget leader Councillor Alister 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.”
Deputy leader of the council Alasdair Christie, who is heading up the coronavirus recovery board, 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 the pandemic 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.”
