Welcome news on improving financial position heard by full Council
At today’s meeting of the Highland Council councillors were asked to note a revenue budget update report, which indicated the possibility of a slight reduction in the £11.254m budget gap predicted at the beginning of October.
However, the report also highlighted the future risks and potential challenges of the coronavirus pandemic.
Budget Leader Cllr Alister MacKinnon said: “Initial indications suggest that the forecast deficit will be slightly reduced, albeit significant risk and uncertainty, in particular in relation to Covid, Brexit and other non-Covid factors, lies ahead.”
Today’s report provides a brief update on the development of fiscal flexibilities, planned to be introduced by the Scottish Government, to provide councils with the flexibility to manage their finances during the COVID-19 challenge.
The fiscal flexibilities are:
- Flexibility to use capital receipts to offset COVID revenue costs
- ‘Credit arrangements’- changed accounting arrangement around PPP/PFI schools
- Loans fund repayment holiday
Depute Leader of the Highland Council, Cllr Alasdair Christie, said: “What does seem clear is that the flexibilities will be available in both the current financial year and financial year 2021/22. Use of the flexibilities in financial year 2021/22 may therefore be considered during the 2021/22 budget process.”
However, he also pointed out: “Any use of those flexibilities, which requires borrowing to support revenue budgets, would have financial implications for future years linked to the repayment of sums borrowed and associated interest charges. Those repayment costs would require equivalent revenue budget savings to be made.”
Planning work is already underway ahead of the 2021/22 budget and the report outlines some of the key assumptions and scenario planning that will be presented to Members in December.
Members were also asked to note two reports by external bodies. These reports, by the Fraser Allander Institute and Audit Scotland, leave no doubt over the size of the challenge ahead.