Councillors to consider emergency budget
City councillors are to discuss how to fill an estimated £12 million black hole in Canterbury City Council's finances caused by the coronavirus pandemic.
The council's new Covid-19 Emergency Committee will meet virtually on Thursday 28 May to debate and decide on an emergency budget being put forward – the first such budget in the council's history.
In the committee report, councillors are told that of the three scenarios considered by officers, the most likely one results in an estimated £12 million budget gap, which is caused by two main issues.
The first is an increase in costs providing new services related to the pandemic, such as housing rough sleepers and running a community hub to support vulnerable residents. The second is a reduction in income from areas such as parking and property rents as a result of there being less economic activity in the district.
Although the government has provided £1.7 million of funding so far to deal with these pressures, it is not enough to close the gap. The council believes that it must take action to address this now, rather than wait until later in the year when even more drastic action might be required.
The bulk of the gap is proposed to be filled by taking around £7.5 million from reserves, the council's rainy day fund which exists to deal with emergencies such as this.
In addition, it is proposed that many of the council's large capital projects be delayed for a year, including the refurbishment of St George's Street, the expansion of Wincheap park and ride and the proposed new council offices at Wincheap.
The Beach Street development in Herne Bay is also deferred pending consideration of an updated business case by councillors later in the year.
This measure would save the council around £1.1 million in capital financing costs. Some other large projects such as the Kingsmead development, which are already contracted and in some cases underway, will continue.
Action that has already been taken to reduce spending includes the freezing of job vacancies, furloughing of some staff and the continuing closure of some car parks to save money on business rates.
There are two key principles behind these proposals – to minimise the impact on service delivery and to retain flexibility, so that if the financial position improves during the year, some of the decisions could be reversed.
A further report will be presented to councillors by the end of September to update the situation and consider any changes that could be needed.
The use of such a significant amount of its reserves would leave the council with much less flexibility with its budget in future years. It is therefore also proposed that work begins immediately on revising its medium term financial strategy and developing options for balancing the budget for the years ahead.
Chief Executive Colin Carmichael said: "This really is a financial emergency on a level we have simply never seen before. Less than two months into the financial year, we have had to essentially rip up the budget for this year that was agreed by councillors in February and develop a whole new one instead.
"The proposal to use a significant amount of our reserves to plug the gap is not one we have put forward lightly due to the potential impact down the line. But if that's our rainy day fund, it's hard to imagine a time when the weather is going to be wetter than this.
"Finding these proposed initial solutions to the problem is just the start, though. We are going to have to take some really tough decisions in the coming months and years about which services we run and how we provide them.
"They will not be matters that we and the public can shy away from and people will need to realise that very big changes to services are likely to be heading their way in the not too distant future.
"All of this said, however, we have a leading role to play in getting the district back on its feet as we emerge from this pandemic.
"Money might be at a premium, but we will work with partners and organisations in a variety of different sectors to find a way forward. The district has always been confident and resilient and coronavirus will not stop it being so."
The Covid-19 Emergency Committee takes place at 5pm on Thursday 28 May and will be streamed live on the council's Youtube channel.
Published: 19 May 2020