The coronavirus pandemic has left the Isle of Wight Council with a forecasted £10 million black hole in its budget.
The local authority says its financial position, as a consequence of the outbreak, is “serious” and it has announced plans to dip into “earmarked” reserves.
According to an internal report released today (Monday), the council has forecast a shortfall of £9.8 million – even after it secured £9 million in emergency funding from the Government.
The council says loss of income, from things such as rent payments, car parks and use of leisure centres, has cost it £8 million. It says a staggering £3.2m of that figure is from car park charges alone.
The council has also recorded a predicted shortfall of £2.3 million in Council Tax and Business Rates payments, however it is not expecting any further help from central Government.
The report states:
“It remains unclear whether there will be further funding allocated from central
government to help meet the £9.8m shortfall.“The Secretary of State however has made it clear that councils should not expect government to meet any shortfall that council’s experience, especially for spending that is not explicitly in alignment with the government’s policy and guidance relating to the emergency.”
The Isle of Wight Council says it is in the process of developing a “deficit recovery strategy” which will allow it to continue to operate “without the need to consider emergency spending controls and service reductions.”
Council Leader Councillor Dave Stewart said:
“Like councils all over the country, the coronavirus has left us with some big financial challenges.
“This report shows that we are making sensible preparations to face them. I have already raised the council’s financial position in a recent meeting with the Minister for Local Government.
“Our track record of responsible strong financial management has meant that today we are in a far better position to weather this storm than we would have been in the past.”
The local authority says it is confident its emergency strategy will be sufficient to identify savings of £9.8m.
It says it plans on using some “earmarked reserves” – previously set aside for risks that have subsided and to fund transformation activities.
The strategy also involved using some of the council’s corporate contingency and placing some previously approved spending plans “on hold”.
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