TOWN Hall finance chiefs at Warrington are forecasting an overspend of £26.8 million this year as a result of the impact of COVID-19.
This compares with a forecast overspend of £8.1 million for the same period last year.
But it is an improvement on the forecast three months ago when the overspend was expected to be £29.9 million.
A report, to be presented to Warrington Borough Council’s cabinet on Monday by the deputy leader of the council, Cllr Cathy Mitchell, says achieving a balanced budget in the current year is increasingly difficult within current levels of funding available.
Due to COVID-19, the council is facing significant extra demand and pressures already in the year that are proving challenging to manage and will require additional government funding to sustain.
To date, the council has received £15.5m additional government funding towards “general” COVID-19 pressures. Subject to meeting various parameters 75 percent compensation support for lost sales and fees income – an estimated £2m -is to be made available by government. If the overspend is moderated for funding received and estimated to date, the adjusted year-end forecast is an overspend of £9.3m.
“At this stage a pragmatic approach to reporting the forecast has been taken with directors working to identify mitigating savings and cost reduction proposals to offset the overspend, “ the report states.
At the start of the year the annual savings target to meet the 2020/21budget gap was £14.1m, progress on savings to date has been substantially affected by the pandemic.
Savings of £10.3 million has already been forecast as “non-achievable.” Officers are working to ensure alternative savings are brought forward to ensure the authority can achieve a balanced budget by the year-end.
The council has reserves that could be diverted to meet a one-off COVID-19 related overspend, however further government funding would 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 years’ budget plans at significant risk unless reserves could be re-established.
If the council is unable to mitigate the extent of the savings unachieved in the year or actively address budget pressures, this could result in service reductions.
The cabinet will be recommended to note the forecast overspend, government funding received and expected to be received, the intention to review other budgets, including those areas where savings have been delayed and the possible need to use reserves to balance the budget.
