Fife Council’s estimated budget shortfall after taking the costs of coronavirus into account has fallen to less than £13 million, councillors have heard.
While the in-year position has improved, the region’s finance chief has warned the impact of Covid-19 on the local authority’s ability to balance the books is likely to be felt for many years.
Members of Fife’s policy and co-ordination committee were given an update on Thursday about the current financial position, just a month after a report suggested Covid-19-related costs were likely to be around £86 million.
That has since been revised downwards to £78 million as a result of changing government guidance and the easing of lockdown, with the estimated costs of providing free school meals, of installing social distancing measures in schools and of IT equipment all being driven down as a result.
Taken together with Scottish Government cash and funding through other sources, Eileen Rowand, finance director, confirmed Fife is now looking at a budget gap of £13 million – markedly down on the initial £51 million estimate near the start of the pandemic.
However, the cost of PPE and more intense cleaning regimes have gone up and Ms Rowand said the revenue gained in some areas, such as parking charges, might never recover to pre-Covid levels.
“I’m certainly comfortable with the financial sustainability of the council this year and services are taking action to control and mitigate costs wherever possible,” she said.
“Where I am concerned, however, is that there will be a legacy of Covid beyond this year and our income will be impacted.
“That’s where I think we need to look at how we deal with our financial strategy beyond the current year.”
Ms Rowand also highlighted the council’s position in relation to uncommitted balances, with almost £9 million likely to be left at the end of the year.
That will be “significantly below” the council’s policy level of 2% of the total budget, although Scottish Government funding expected over the coming months should supplement that.
Talks are ongoing with the Scottish Government in relation to “flexibilities” that could be used, such as borrowing, payment holidays and writing off costs in relation to PPP/PFI projects.
Council co-leader David Alexander said: “We’re still in a fairly desperate position but the trajectory is good.
“The first report we got three months said there would be a £51 million net loss, then it was £19 million, and now it’s down to £13 million with more money to get allocated.”
