Council considers updated financial position

Members noted a revenue report with an update on the Council’s year end financial position which estimates potential (non-earmarked) Reserves at £44.1M.

The budget report to Council on 5 March provided the context of the revenue budget, however, this year in particular has seen a rapidly changing environment in relation to Government funding. The Council now has increased clarity on a number of recently announced funding and some formal confirmation is still awaited.

The forecast of an overall year end surplus of £3.1m for the financial year 2020/21, was reported in the quarter 3 revenue budget monitoring to the Corporate Resources Committee on the 25th February.

The impact of this surplus would increase non-earmarked general fund balances to £26.3m at financial year end.

Since that position was reported, three additional revenue funding streams are expected to come to Highland Council. These include a further £3.8m for the income recompense scheme; £11.8m one off Covid funding for 2020/21 and a further £2.2m for education logistics.

The combined effect of these expected funds would increase the Council’s 20/21 underspend by £17.8m, potentially putting year end non-earmarked general fund balances at £44.1m. The actual year end position will most likely be different from this dependant on actual expenditure and income in the final quarter of the year.

As part of the approved collaborative budget, Members agreed £9.8m of investment as part of the Health and Prosperity Strategy.

Members discussed the impact of the additional funding and agreed that plans for a second phase of investment should be developed for consideration at the June meeting of Council.

Depute Leader Cllr Alasdair Christie said: “This higher level of Reserves is very good news and puts us on a stronger footing which will enable further investment, but also gives the Council the essential medium term financial sustainability we need to manage future risks. The focus and targeting of our activity will continue to be on investing in people, places, business and the Highland economy.”

Leader of the Opposition, Cllr Raymond Bremner said: “I look forward to continued collaboration on the further proposals for investment which will be crucial in helping our communities to recover from the impact of the pandemic.”

ends