Welcome news on improving financial position heard by full Council

29th October 2020

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 Alasdair 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.

From the report

1.1

Members received a report on the 2020/21 revenue budget at the special Council meeting held at the start of this month. That report highlighted a potential residual year end budget gap of £11.254m.

1.2 The report of the 1st October also outlined ‘fiscal' flexibilities, planned to be introduced by the Scottish Government, to provide Councils with the flexibility to manage their finances through the Covid challenge. This report provides a brief position update on the

development of the flexibilities.

1.3 This report does not provide any updated figures for the potential year end budget gap but signposts Members to the quarter 2 revenue budget monitoring that will be reported to the Corporate Resources committee on the 11th November. Initial indications suggest that the forecast deficit will be slightly reduced, albeit significant risk and uncertainty lies ahead.

The full report can be found at

https://www.highland.gov.uk/meetings/meeting/4330/highland_council

Item 11 Revenue Budget - Update Report Report, 514.67 KB