Budget gap of £87.5 million is highlighted by Highland Council in wake of Covid-19 coronavirus lockdown disruption, but critics question the numbers
Highland Council is now projecting a budget gap of £87.5 million due to the coronavirus outbreak, according to leaked papers.
Local authority claims of an £80 million shortfall were treated with scepticism by opposition politicians when they were aired recently.
However, following a members’ briefing, the council has revealed a new, greater tally – the higher bill including a loss of £25.5 million in fees and income charges.
Budget Leader, Cllr Alister Mackinnon, who is also a ward member for Dingwall and Seaforth, said: “Officers are continuing to assess the impact that the pandemic is having on the council’s financial position, while managing the response to the emergency and the risks presented to the budget.
“What is unfolding is a very complex picture with many unknowns that are affecting the council’s financial position as its response to Covid-19. Looking ahead, once the Scottish Government’s full package of financial support to local authorities is known, we will need to reassess our financial position and implement a plan for recovery.”
It appears the closure of Eden Court and facilities run by High Life Highland will cost the council £6 million, while previously planned savings of £8 million can now no longer be delivered.
Also within the papers a loss of £13 million is flagged up in terms of “recharge income linked to the capital plan” though it is not clear what service or investment this refers to.
Contractual costs linked to delays in the capital programme, however, has a £9 million loss attributed to it and additional service costs for waste, housing, supply teachers and staffing also totals £9 million.
Increased service demand, especially for welfare, is expected to cost £7 million and new costs attached to the local authority’s response to the virus will add another £5 million over six months.
In a further development late last night, the council sent details of the potential impact of Covid-19 on its revenue and capital budgets to the Convention of Scottish Local Authorities (Cosla).
Despite more figures of the council’s financial situation being provided, Conservative group leader Andrew Jarvie argued that the numbers still do not add up.
He said: “This just seems to have doubled down without explanation. I really struggle to see how over 50 per cent of budget savings will not be delivered at a time when the council is not even running 50 per cent of services. Does it really cost more to not run a service?
“I have had to ask for more clarity on the lack of capital plan savings. There is no reality in which I understand how not going ahead and borrowing money to build something leaves a £23 million liability. That’s at least five times the annual repayment for those loans, which will now not be taken. It makes no sense whatsoever.
“This council claims that the virus will create a deficit that is 15 per cent of its budget. Speaking to colleagues across the country, theirs are at 10 per cent maximum, most in single digits. This urgently needs explained exactly why and how the Highlands are in such dire straits, otherwise it is just not credible."
