Teignbridge District Council is facing a near £7m budget black hole as a result of the coronavirus pandemic.
Martin Flitcroft, the council’s chief finance officer, told Tuesday’s executive meeting that the COVID-19 pandemic has had a catastrophic impact with initial estimates seeing £12m of lost income for the council.
He said that while some funding has already been provided to cover the deficit from Central Government and further support to cover lost income from fees and charges will be forthcoming, the council currently anticipates a budget gap of £6.9m in 2020/21.
The executive meeting heard the council was looking at how to make savings going forward and utilisation of reserves to help reduce the deficit in conjunction, but include options they would ‘prefer not apply’.
Mr Flitcroft, in his report to the meeting, said: “The COVID-19 pandemic has had a catastrophic impact on the income of the Council. The initial impacts were felt towards the end of the 2019/20 financial year and significantly in the 2020/21 financial year, with initial estimates of lost income were in excess of £12 million.
“The Government has provided funding of £1.4 million to date and we await clarification of what further funding will be provided and we currently anticipate a budget gap of £6.9 million in 2020/21.
“The most significant loss of income is from fees and charges. This is currently predicted to be just under £6 million with the largest losses being suffered in car parks and the closure of our leisure centres.
“Making accurate predictions of future receipts is difficult and dependent upon lock down release measures and reaction to this by the general public, and there is also concern about our other income streams – in particular rents receivable if there are significant closures and potential loss of business rates, while higher levels of unemployment may reduce the income we receive from Council tax and a rise in council tax support.
“The slowdown in house building will have an impact on estimated council tax growth and any potential future receipts we may get from New Homes Bonus or its equivalent.
“We have now identified savings in excess of £2m which could be used to reduce the gap. These include items which we would prefer not to apply but will await further guidance from Government, and as a result it is proposed that these savings are frozen from the current year budgets until we have that greater clarity.
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“The savings include a freeze on recruitment for this year in relation to vacant posts unless externally funded, elimination of any contribution from revenue to capital to support the capital programme, savings in travel and fuel, partly due to changed working patterns and a reduction in the predicted price of fuel.
“Other savings include reductions in repairs and maintenance, savings which naturally occur as a result of services not operating e.g. leisure centres, training and numerous ledger spends, while we have taken advantage of the Coronavirus Job Retention Scheme and furloughed a significant number of posts in order to enable us to receive funding for staffing costs while services cannot operate or are disrupted due to COVID-19. These are mainly in leisure as a result of the closure of the leisure centres, and in April the value of the claim amounted to £112,000 for that month.”
Mr Flitcroft added that the Government have also announced a scheme that will allow councils to recover some lost income from fees and charges, which would support 71.25 per cent of what the projected figures were, with him adding that this could roughly equate to more than £4.25m of the budget deficit.
The executive committee unanimously agreed to note the report and approve the draft revenue result for 2019/20, which saw the council come in £5,000 under the target budget.