Covid-19 crisis leaves Scottish Borders Council facing £15m budget shortfall

Scottish Borders Council faces a funding gap of £15m due to the coronavirus pandemic, councillors were told last Thursday.

Friday, 3rd July 2020, 7:00 am
Pressure on services and loss of income have had a major impact on the finances of Scottish Borders Council.

They were warned that the recovery process could be “very long and difficult and the repercussions may be felt for several years to come”.

And on top of that, it’s expected that there could be a further shortfall of £7.2m shortfall in council tax.

The council’s chief financial officer David Robertson said: “The council is regularly reviewing the impact of Covid-19.

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“The latest projections we have, based on the performance after one month in terms of the council’s finances, is that we have pressures in the current financial year of around £15m, arising from a culmination of loss of income and also service pressures – unplanned expenditure associated with the Covid-19 response and delays in the financial plan savings.”

In response to this, there will be moves to reduce non-urgent and non-essential expenditure, and a review of budgets across the council.

Mr Robertson added: “Very helpfully, the Scottish Government has been providing cashflow support to councils through revenue support grants, but that support is not sufficient to fund the financial pressures we are seeing.

“We are not alone. Highland Council has reported this morning an impact of £96m in terms of their finances and Edinburgh is impacted by over £80m in terms of lost income from the likes of trams and buses in the city.”

Mr Robertson then pointed out the slowdown of payment of council tax.

Although payments by direct debit have held up very well, there was a reduction in terms of cash and cheque payments in the first month of £600,000 around.

If continued for the remainder of the year, that could create a shortfall of £7.2m, on top of the £15m already identified.

Executive member for finance, Councillor Robin Tatler, said it was too early yet to tell what the final extent of the financial challenge would be, but it would be significant and there would be some difficult decisions ahead.

Councillor Kris Chapman asked if the council was prepared to help people in the event of a second wave of covid-19 infections.

Mr Robertson replied: “We hope there won’t be, but are aware that there could be a second wave.

“The council will seek to utilise all the resources that we have at our disposal to support communities and businesses in that regard.”

Councillor Stuart Bell, head of the opposition SNP group, was less than impressed by the financial report.

He added: “September may perhaps be a better time to evaluate the totality of SBC finances, but even that may be too early. Now is not the time.”

He suggested the council looked to its reserves for making up the expected shortfall.

Mr Robertson replied: “We do have absolutely imperfect information at the moment in terms of our response to Covid-19 and therefore this is a position statement very early in the year.

“I respect Councillor Bell’s comments about the incompleteness of some of the information which is contained within the paper.

“It’s very much focused on the work of the council, and it’s to set out for you some of the difficulties we are experiencing as a council and to reassure you the management team remain absolutely focused in terms of the financial stability of the council.

“We will come through this event, but it will be very, very challenging for us.

“Councillor Bell is correct about the level of reserves the council holds. However, these are not unallocated reserves, they are usable reserves.

“The majority of them have been allocated previously by council’s decisions to other important initiatives, for example the IT transformation funds, our winter maintenance reserve and other areas of activity.

“Should decisions be taken as to the reappropriation of these reserves then of course they can be used.”

He assessed unallocated reserves were at £7.8m in line with the annual strategy.