Powys County Council 'in danger of running out of cash' if lockdown continues for several more months

The stark assessment was made by the head of finance, Jane Thomas as she explained that the council is losing £3,350,0000 a month in revenue.

In a report to the cabinet on Tuesday, she told councillors that the current reserves of £13 million would be able to cover a deficit of around £10 million for four months.

The council does have a further reserve pot of over £13 million but this is ringfenced for services such as schools and housing.

Ms Thomas said: “There are many unknowns and it is still difficult to accurately assess the impact with any certainty as things are constantly changing.

“A deficit of £3.35 million a month would equate, if all things remain the same, to over £10million (by the end of June).

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“Our reserves would be the first point of call and the general fund reserve total is £13 million.

“That would provide coverage of a deficit of around £10 million for just over four months, not a significant level of reserves to deal with this situation.”

Ms Thomas continued: “We do have other specific reserves and we will review those to see which of those could potentially be released to support a deficit if we are in that situation.”

In the 2020/21 budget there had been an expectation that £10.7 million of cuts and savings would be made.

Underspending

Ms Thomas added that there would be “delays” to this, as well as some cuts/savings not being made “at all”.

But she did have some good news for the cabinet, by saying that underspending and cost reduction had happened in services that are not needed during the pandemic.

The cost pressures due to coronavirus are calculated as £3,377,000, with the council receiving £2,044,000 in Covid grant funding from the Welsh Government.

Ms Thomas added: “We have had funding from Welsh Government, that has been allocated to deal with the additional costs, including social care activity.

“We are claiming back those costs on a monthly basis, so it’s a huge task to make sure we claim them in a timely fashion.

“It’s fair to say that the position we find ourselves in is not unique, all authorities are facing the same difficulty.”

Finance portfolio holde Aled Davies said: “Clearly the figures are quite frightening.

“The reserves we carry are sufficient for normal situations but, this is anything but normal.”

Councillor Davies added that the council tax income had fallen by £600,000 during April, the first month of the financial year.

The council will now look to ease the financial burden by assessing putting staff on furlough leave; finding out which cuts/savings can actually be made in 2020/21; freezing expenditure on all but “business critical” activity and assessing the building programme as money earmarked for projects might not be needed due to work being halted and delayed.

Councillor Davies added that these were “very sensible actions” to take.