Council urged to use reserves to plug forecast deficit

At their meeting on Thursday, July 30, members of the council’s finance panel thought that using the reserves would be a better way of filling the predicted financial black hole caused by coronavirus, than deep cuts to services or a big council tax hike.

Councillor David Thomas, said: “We’ve got a projected deficit of £13 million, that’s huge and if it’s going to be there at the year end there’s no way we can kid ourselves that we’re not going to have to use reserves to fund some of that.

“Whenever we have a query from the public about holding reserves we’ve said that they are there to protects us against a national emergency or catastrophe.

“Now I would have thought the Covid crisis falls into that category.

“The cabinet ought to be taking up a position that they would be prepared to use a significant amount of the usable reserves as opposed to cutting services.

Looking at the data in the report, Councillor Thomas believed there were nearly £23 million in usable reserves.

More Covid-19 coverage:

• See the latest coronavirus stories from Shropshire, Mid Wales and beyond

• Coronavirus: Latest number of deaths and confirmed cases in Shropshire, Telford and Mid Wales

• Star Neighbours - how you can give and get help locally

He also wondered whether all but the most essential building projects should be postponed – as this would ease the pressure of borrowing against the budget.

Head of finance Jane Thomas said that money Councillor Thomas was talking about was held in “specific reserves” that were being used to fund some existing programmes such as replacing council vehicles.

Ms Thomas said: “We do have an option to redirect that if we wish, but it would impact on the revenue budget in terms of additional borrowing that would be needed.”

“Some of those could be released but not all, some have been set aside and held for really specific reasons.”

“That is a discussion with cabinet for when we understand what services may need to do to balance their budget.

“It will probably be a mix as we need to ensure future financial resilience.”

Councillor John Morris said that the cabinet needed to be less “woolly” about using reserves.

Finance portfolio holder Councillor Aled Davies, said: “We would not want to go in to next year without reserves

“It not sitting there doing nothing, it does help support service delivery.”

“We’ll get a clearer picture as we go through the year, we just have to constantly monitor the situation.”

He added that it would be difficult to “reduce services this financial year.”

The finance report for April-June 2020/21 shows the reserves stood at just over £32.5 million on April 1.

By March 31, 2021 it is expected that nearly £9.5 million is already earmarked to spent on to plug gaps in various service budgets, leaving just over £23.5 million.

Ms Thomas in her report, says that using reserves to plug the deficit has to be a “last resort.”