Council warns of £5.5m coronavirus hit as funds ‘unlikely to cover losses’
PUBLISHED: 16:40 01 June 2020 | UPDATED: 16:40 01 June 2020
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A Norfolk council has warned it could face a financial loss of more than £5m due to the cost of responding to the Covid-19 crisis.
Breckland Council is warning that losses due to additional costs and lost income could amount to several millions, according to a report produced ahead of the authority’s first virtual meeting.
The council’s realistic estimate of its financial position following a six-month-long impact from the virus warns that Breckland could see £2.8m in costs and income loss.
While the council’s pessimistic outlook - if the virus were to affect the authority over a nine-month period - could see it lose £5.5m in extra spending and missed pay.
The report was presented to the council’s cabinet at the meeting held on Monday, June 1.
And Philip Cowen, executive member for finance and growth, told councillors: “The council has had significant costs. All councils in the country are facing an unprecedented call on resources.”
He added: “I’d rather we don’t look at the pessimistic view. It’s a bit of blue sky thinking and much further into the future.”
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The council has received almost £1.5m in emergency coronavirus funding from central government, but it remains “highly likely” that the council will have to draw on its reserves in order to balance its books this year - and even next - but the council has stressed there is a “high degree of uncertainty” within its forecasts.
Alison Chubbock, chief accountant, stated in the report that “the council is facing considerable challenges”.
She said: “This funding is unlikely to cover our losses to the end of June and certainly will not cover losses from July unless additional funding is provided.”
The council’s general reserve fund contains the authority’s minimum balance of just £2.5m, and the chief accountant said “it would not be prudent to use all of it in case of future emergencies”.
She added: “We would be able to cover the pressures from a three or six-month impact, but not for any longer.”
Financial pressures have arisen from greater demand for services such as temporary housing; lost income from planning fees and charges and rent waivers; savings not being delivered as planned; lost investment income; and lower rates of council tax collection.
The council plans to review its budget areas to reallocate savings to current priorities, as well as reconsidering its ongoing capital programme.
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