Covid-19 Costs Scarborough Borough Council More Than £10m

The Covid-19 pandemic has cost Scarborough Borough Council more than £10 million so far, the authority has revealed.

The council says that the crisis has meant it has had to deal with an “unprecedented” financial shortfall and that Government grants will only offset part of the losses.

In an interim budget report prepared for the authority’s cabinet tomorrow, the council’s finance Nick Edwards said the council will look to borrow funds to cover the losses and warned that a second lockdown would only make things worse.

He 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 grant, 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 will be funded through borrowing.

Mr Edward’s report adds:

“The annual revenue costs associated with 40-year borrowing of £4.089m currently stand at £164,000.

“Budgetary growth of £200,000 has been included within the council’s

Medium Term Financial Plan projections from 2021/22 onwards to account for the additional costs associated with this proposal.”

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

Since the easing of restrictions, car park income has got back on target which if this were to continue through the end of the year would reduce the debt by a further £859,000. However, the council’s report was written before the new “group of six” restrictions were announced.

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 after the firm got into financial difficulty during the pandemic.

Other losses and cost pressures include almost £1.5 million on extra homelessness provision during the pandemic, an anticipated cost of approximately £760,000 for operating the borough’s leisure centres in a post-Covid world, and a loss of nearly £500,000 in commercial waste collection revenue after the closure of many businesses for a number of months.

The council’s cabinet will also be asked to approve 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.