A report to the council's Executive next week says £8.6m of this shortfall will need to be found in the current financial year to balance the budget, with the remainder adding to an increasing budget deficit over the next three years.
The report to the Executive meeting on Wednesday 29 July outlines the actions being taken to address the shortfall, including identifying areas where savings can be made and lobbying the Government for further financial support.
The report says that after the council approved a "robust and deliverable" budget in February, the financial environment "very quickly changed" following the coronavirus outbreak.
"The council rapidly responded to the immediate needs of the community throughout the lockdown, which included the closure of some of its facilities as well as the creation of new services," the report continues. "As the pandemic has progressed the council has recognised the need to protect its residents, suppliers and providers. Particular measures have been needed to support care providers, rough sleepers, leisure providers and local businesses, while at the same time ensuring the council’s own workforce could continue to operate efficiently and effectively.
"All of these actions came with financial consequences. At the same time the council was experiencing loss of income from its car parks, investments and other income generating services."
The cost to the council so far of Covid-19 is estimated to be £26.7m, largely made up by:
- additional expenditure to support adult social care providers and purchase Personal Protective Equipment (PPE) - £10m
- impact on council tax and business rates income - £8.3m
- lost income on parking, events and leisure facilities - £7.4m.
This cost has been offset partly by financial support from the Government and the council will continue to lobby for more support.
Despite this a budget gap of £15m remains. With £8.6m of this needing to be found in the current financial year, the report identifies savings totalling just under £2.8m, plus the use of £750,000 of reserves, reducing the immediate gap to around £5m. It is hoped that future government support will help close this gap further.
The report ends by highlighting the knock-on effects of Covid-19 on future council budgets. A forecast £19m budget gap over the next three years has now risen to £26.2m with £11.6m of that required next year.
"This will mean that further difficult choices are likely to be required in the future and could potentially include a fundamental review of which services the council can afford to provide," says the report. "The council will look to engage widely with residents and partners about the services it offers, its spending and funding sources, as well as the financial challenge, and will seek their views."
The report to the Executive can be found on the council's website at https://apps.n-somerset.gov.uk/Meetings/document/report/NSCPM-111-547.