Shropshire Council coronavirus costs forecast is reduced by £10 million
The estimated cost of the coronavirus pandemic to Shropshire Council has been revised down by almost £10 million.
The council’s finance chief, James Walton, has set out his early projections of how the rest of the financial year could shape up, predicting an overspend of £1.925 million by March 2021.
His quarter one monitoring report, which will be be presented to cabinet members next week, estimates the cost of the pandemic to the council to be £26.438 million – lower than the £36 million predicted in a report to cabinet in July.
The revised estimate comprises £12.365 million in additional expenditure and £14.073 million in lost income.
But this blow has been softened by a series of government grants totalling £20.35 million, with a further £5.447 million expected to compensate for lost income, as well as £442,000 in furlough payments.
This would leave the council with a coronavirus-related budget pressure of £199,000.
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The report says: “It can be assumed that if the pandemic had not happened, the council’s forecast outturn position at quarter one would have been an overspend of £1.726 million.”
The monitoring report paints a brighter picture than the same report this time last year, which warned of a projected overspend of almost £8 million by the end of 2019/20.
But it warns that steps will need to be taken to ensure the council's spending does not exceed its £575.462 million budget this year.
The updated financial strategy signed off by cabinet in July said cuts of £18.725 million would need to be made in the current financial year, but £7.252 million of savings are currently rated ‘red’, meaning they are not expected to be delivered.
A further £5.855 million in savings are rated ‘amber’, but Mr Walton says it is vital that these are achieved by the end of the year.
The report says: “Management action across all areas of the council is now required to attempt to bring the budget back into balance, as far as possible.
“Without management action, there is a risk that savings proposals currently rated as ‘amber’ may be undelivered, which would have the effect of increasing any underlying overspend by £5.855m.”