£10m Funding Shortfall For Scarborough Borough Council Due To Covid-19

There is no crystal ball to predict the full impact of Covid-19 Scarborough councillors have been warned as the authority looks to address a £10 million bill run up so far during the pandemic.

The council’s cabinet was told today by their finance director Nick Edwards that information and funding promises from the government have been changing “monthly, weekly and hourly” but things had now reached a stage where the authority could have a “clear view” on what it needs to do to come out the other side of the crisis.

Mr Edwards said that the pandemic has meant the council has had to deal with an “unprecedented” financial shortfall and that grants from Westminster will only offset part of the losses.

In the budget report, Mr Edwards wrote:

“Current projections anticipate that the council will face income losses and cost overruns of circa £10.1 million in the current year alone and there is a risk that this position could deteriorate further if additional local or national lockdown measures are imposed in the remainder of the year.

“A proportion of this shortfall will be funded through government grants, however the council will still be required to manage an unprecedented level of residual budgetary shortfall within the year.”

In total, government grants will cover £4.483 million of the losses, leaving the council to find the remaining £5.625 million.

The government allows authorities to spread council tax and business rate debt into future years so Scarborough Council is proposing to add a £1.5 million shortfall to its 2021 budget.

That leaves £4.089 million which it is proposed to be funded through borrowing, which would cost the council approximately £164,000 a year.

The biggest shortfall from the council came from car parking, with more than £2.3 million lost when the country went into lockdown.

Other big losses come in the shape of £1.3 million from rents, including £762,000 from a Company Voluntary Arrangement ( CVA ) the council entered into with Travelodge for its hotel in Scarborough.

The cabinet approved a “one-off draw from reserves” of £1 million to cover an identified funding gap for the next financial year in 2021/22.

The £1 million will come from a pot of £5.5 million that had been earmarked to take forward the council’s capital strategy.

The pain for the council will not end with coronavirus, however, with Mr Edwards saying the authority still has to find a way to slash £5.3 million out of its operating budget over the next three years.

He told the cabinet that a “robust system of outcome-based reviews” of services would be carried out with chief executive Mike Greene would start shortly on this issue.

The leader of Scarborough Council, Cllr Steve Siddons, said the budget report had “mixed” news for the authority.

He said:

“There are some concerning, worrying things but there are also some positive things in there that on a balance it makes me feel confident for the future and that we have the right things in place to help us through this really, really difficult situation.”

Cllr Siddons added that the council could also look to potentially sell off assets or land as a way to reduce the need for borrowing.