Aberdeenshire Council considers financial impact of coronavirus

Aberdeenshire Council considers financial impact of coronavirus

Aberdeenshire councillors have been urged to prepare for significant changes to the local authority’s financial plans, given the impact of responding to the coronavirus pandemic.  

The full Aberdeenshire Council met remotely last Thursday to consider business items, with an agenda dominated by COVID-19 related activity.

Alan Wood, head of finance, presented a report advising that a full review of the council’s medium-term financial strategy (MTFS) should be undertaken as a result of the unprecedented circumstances, reporting back to full council in June. The MTFS covers all the elements of the council’s budget including revenue, capital, reserves, housing revenue account and carbon.

Aberdeenshire Council set its budget on March 18. Since then, public services have been widely affected by the pandemic with many facilities closing and services transforming to respond to the crisis.

The change to services is expected to have an impact on Council Tax collection rates, school meal and car park income, and the review will set out the full implications of this in more detail. There is also likely to be an impact on the council’s ability to make all the savings put forward in the budget.

Three options were set out in the report to support the review of the financial strategy, including accelerating financial performance reporting, providing monthly updates based on actual income and expenditure, and segmenting the financial year into quarters. Scenario planning will also be developed, which will consider a number of potential outcomes based on how services will be impacted in the coming months, based on Government guidance.

Mr Wood also set out the significant changes to the council’s budget over recent weeks, including impact of a non-domestic rates holiday for a year, receipt of £46.7 million in business grant support – of which over £26m has been distributed to Aberdeenshire businesses in the last three weeks, a share of £350m to support the council’s response, and the re-profiling of income from the Scottish Government to frontload budgets to support the immediate response.

Councillor Jim Gifford, council leader, said: “It seems a long time ago that we set our budget, even though it was only six weeks and it now bears little resemblance to the current situation. Recovery will depend on many factors – what we have to spend and what any new settlement looks like. What’s clear is that our current budget is no longer going to reflect our requirements, so I welcome the review.”

Councillor Peter Argyle added: “We all recognise the many pressures on our budget which has been completely taken over by events. I would like to acknowledge the tremendous achievement of our teams who have made payments of £26m to 2,300 businesses in three weeks – it’s so important to local business and is essential part of responding in supporting our economy in these difficult days.”

Councillor Gwyneth Petrie supported the recommendations, recognising the need of finding a practical way to get through the situation and helping councillors to fully understand the impact going forwards.

Councillors unanimously supported the recommendations.

  • Read all of our articles relating to COVID-19 here.
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