£19m funding gap as Fife battles to save budgets after lockdown
Fife Council is staring at a funding gap of almost £20m because of the huge costs of coping with the coronavirus pandemic.
Lockdown has cost the regional authority some £86m so far - up from the estimate of £78m given just one month ago.
Negotiations over funding from the Scottish Government are continuing, but councillors and senior officers have warned that balancing their budgets could be a major challenge.
The financial implications of lockdown were described as “far reaching and potentially significant” for the Kingdom.
Work on funding has brought the funding gap down to £19m, but concerns over a second wave of the virus means that figure could rise once again if services and buildings went back into lockdown.
Eileen Rowlands, executive director of finance, said the council could face a concerning deficit when it came to setting its budget - and that could have major implications for residents.
The options facing the local authority are to dip into its reserves, make more savings, and hike Council Tax bills.
She said: “There is not a lot of flexibility. We are trying to use everything we can in the current year but we may face increasing costs.
“I am looking at using a level of our balances, but we cannot clear them out completely because there are risks of a second wave which we would then have to deal with.
“We are trying to get to a position where we can close the gap as far as we can, and there then may be further decisions required in August.”
Councillor Altany Craik warned of a worst case scenario of “eye wateringly large” Council Tax rises without extra funding to cover the financial gap, adding: “We must make sure we are not exposed to that level of pain for Fife residents.”
And he cautioned against major cults to services, noting: “ We need to make hard decisions. … but as we try to close the financial gap, we can’t eye off protecting jobs and our staff. These are key people we will rely on in the event of future issues. They have been fantastic.”
Steve Grimmond, chief executive, said the council had to be ready to respond in the event of a second wave leading to any lockdown or restrictions - and that would simply pile more financial pressure on the council.
He said: “As with the original emergency, being prepared to deal with pandemic creates significant financial risk and challenge to the council.
“We do not have a contingency plan to meet extra costs that might be incurred. We are struggling to deal with exceptional; costs that happened as a result of the original emergency.”
Councillors will be given a further update on funding and the financial picture in August.
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