‘Monumental challenge’ - council takes £2m hit over cost of Covid crisis
PUBLISHED: 07:28 19 May 2020 | UPDATED: 07:56 19 May 2020
A Norfolk council is forecasting a £2m budget deficit as it warns of the “monumental challenge” of coping with the Covid-19 crisis.
North Norfolk District Council (NNDC) is projecting a financial shortfall of around £2m - of which they are set to make up just £1.1m via government Covid-19 funding, leaving a “significant deficit”.
And councillors have been told the cost of funding the council response to the outbreak is set to have a “profound impact” on planned savings and income.
But finance cabinet member, Eric Seward, insisted the council was “not in the business” of cuts.
At a cabinet meeting on Monday, May 18, he said: “This council has suffered a financial hit. It’s £2m.”
A report from head of finance Duncan Ellis told councillors the council faced around £429,000 in excess “exceptional” costs, in addition to around £1,098,000 in lost income, due to “significant reductions in fees and charges”.
NNDC should expect to make fewer savings, while reviewing its capital spend and continuing to lobby government for more funds.
The council’s reserves are “already forecast to reduce from £17.6m to £9.3m” in the next four years, a reduction of 47pc, and the council will face “difficult funding decisions”, the report added.
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Plans for the 2021-22 budget are now in flux, and the council will have to “fundamentally question the assumptions” it was based on.
“A world-wide pandemic was not one of the scenarios considered as part of the process,” Mr Ellis said.
The finance officer’s report also stated that NNDC had received £1.1m to date, with £1,045,000 of that in the second tranche of cash.
He added: “But we still need a lot more - we need to lobby for tranche three.”
And Steve Blatch, the council’s head of paid service, said NNDC had now paid out £49m in business support grants to 4,449 firms.
Mr Seward told the cabinet that NNDC could have to make “significant savings” if promised government money was not delivered, but added: “We are not in the business of making cuts to key frontline services.”
He says reserves will be a “last resort” and added: “We will rise to the challenge and do the best we possibly can.”
A further financial update will to be presented in July, and the council’s current budget position is “constantly changing”.
Cabinet voted to continue lobbying government for financial support and agreed to update its monetary strategy.