Harrogate Borough Council faces “significant detriment” to its finances but can still come up with a balanced budget, say council officials.
Senior councillors on the authority’s cabinet signed off on a financial recovery plan last night which will see the authority review its budget and reserves as it faces a £15 million shortfall due to coronavirus.
As part of the plan, council bosses will review the authority’s 2020/21 budget, reserves, investment plans and capital expenditure including borrowing.
Officers are expected to report more on the council’s financial position once the reviews are complete and bring them before future cabinet meetings.
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It comes as councils across the UK are warning that some may have to issue section 114 notices – an emergency measure in dire financial circumstances – and potentially cut services to deal with the financial gaps.
Other authorities, such as Leeds City Council, have warned of that the crisis would leave them with no choice but to cut frontline services if no financial backing is given by government.
But Paul Foster, the council’s head of finance, assured senior councillors that the authority was not at the stage of putting together an emergency budget and that it still thinks it can meet a balanced budget.
He said: “It will come as no surprise that the council will be faced with significant financial detriment as a result of covid-19 as many other organisations are.
“The financial implications are challenging to estimate with certainty as the number of unknowns to how long lockdown will continue and what will recovery look like.
“I am pleased to say at this stage we are not at that position, we still think that we can balance the budget for this year.
“I am not contemplating issuing a section 114 notice and we are also not looking to do an emergency budget.
“Only if we get to the stage that we need to issue a section 114 notice would we consider any more severe restrictions on spending.”
Mr Foster added that the council had faced additional costs in responding to the crisis on IT and homelessness and lost income on the convention centre, parking and leisure services.
However, Cllr Graham Swift, cabinet member for resources, said the council was in a better position than others and the authority had been “prudent” with its investments.
He said: “We are going to be impacted by a variety of lost revenues in car parks, pools and other things that generate money for us.
“But the reality is that we are not exposed with the risk profile that some very significant large and small councils around the UK are engaged in.
“I think it’s a testament to our council have put our finger in the pie in investment, but we have done it prudently and with a balance risk approach which is frankly paying off at this stage.”
