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Local authority's financial black hole deepens as forecast predicts shortfall could be as much as £80 million due to pandemic


By Scott Maclennan

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Highland Council budget launch in February. Leader Margaret Davidson, depute leader Alasdair Christie, budegt leader Alister Mackinnon, chief executive Donna Manson.
Highland Council budget launch in February. Leader Margaret Davidson, depute leader Alasdair Christie, budegt leader Alister Mackinnon, chief executive Donna Manson.

Highland Council is preparing for a budget gap of over £80 million within the current financial year due to the impact of the coronavirus.

It is a nightmare scenario for the local authority which, before Covid-19, forecast a worst case scenario would see a budget shortfall of £77 million over three years.

Just two months ago, the council agreed a budget to tackle a financial blackhole of £20.5 million.

That has now increased almost four-fold.

All councillors were briefed on the latest situation earlier today, a week after the local authority leadership revealed it would have to redo its entire budget.

Now budget leader Alister Mackinnon has warned that despite the council preparing for recovery and renewal in the medium to long term “we are a long way from any return to normal.”

Losses include:

  • A 63 per cent drop in planning income
  • A 52 per cent drop in planning applications
  • A 50 per cent drop in building standards applications
  • Car park income has fallen from £77,000 to just £525
  • An expected loss of £5 million in Council Tax
  • Other losses include licensing fees, income from events and festivals and advertising.

Budget leader Alister Mackinnon said: “Officers are currently preparing a full impact analysis to assess lost income and new cost pressures we are facing.

“Just in terms of income lost, we have seen a 63 per cent drop in our planning income alone with a 52 per cent drop in planning applications and a 50 per cent drop in building standards applications in comparison to the same five week period last year.

“So far this year our car park incomehas dropped from £77,000 to just £525 and we expect to lose some £5 million in Council Tax receipts. Other losses will include licensing feesand income from events and festivals and from advertising.

“We are facing tremendous new cost pressures at the same time, including additional adult social care, welfare, supply teaching and the costs of providing child care for key workers which alone is amounting to £500,000 every 10 weeks.

“Many of our staff are unable to carry out their normal duties and efforts are concentrated on dealing with the emergency situation, managing the humanitarian assistance centres, volunteer coordination and helpline response. This means we are unable to deliver many of the budget savings agreed in March.

“The utmost priority is, of course, to support the nationwide response to slowing the spread of the virus, providing welfare and business support and the health and wellbeing of our staff and our communities.

“I also want to express my thanks and my praise for the tremendous response of all our staff in taking on new tasks, adapting their roles and responding with resilience and enormous care to this crisis.

“We are preparing for recovery and renewal in the medium to long term, but we are a long way from any return to normal.”

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