WARRINGTON Borough Council is heading for an overspend of £29.9 million in the current financial year – due to the Covid-19 pandemic.
This is the forecast at the end of the first quarter of the year – and it compares with a forecast at the same time last year of an overspend of just £6 million.
Achieving a balanced budget is becoming increasingly difficult with the currently available levels of funding, according to a report to be presented by the deputy leader of the council Cllr Cathy Mitchell (above) at a meeting of the cabinet on Monday.
As a result of Covid-19 the council is facing significant extra demand and challenging pressures that will require additional government funding to sustain.
At the start of the year, the annual savings target was £14.1 million – but of this £10.678 million is now thought to be unachievable.
The council has robust reserves to enable it to cope with unforeseen problems. It is required to have reserves of 3 per cent/5 percent of its annual budget to deal with events such as natural disasters and it is expected to be within this tolerance this year as the reserve is around 3.4 percent.
But the report adds: “The council currently has reserves which could be diverted to meet a one-off Covid-19 related overspend, however further government funding will be needed before the end of the current financial year to avoid depleting all available reserves. Depletion of reserves would leave the council in a difficult financial position and could put future year’s budget plans at significant risk unless reserves could be re-established.”
The report says there are currently significant risks of not being able to ensure the council’s long term financial position is sustainable.
If the authority is unable to mitigate the extent of savings during the year, cuts in service are possible.
The cabinet will be asked to note the situation and that the council’s directors will continue to look at ways to bring spending back in line with the approved budget of £139.983 million.
