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South Kesteven District Council may need to raid £2.8m cash reserves to balance books due to Covid-19 pandemic

The district council could have to dip into a £2.8 million cash reserve to balance its books this year due to the impact of the Covid-19 pandemic.

The situation facing South Kesteven District Council was laid bare at a meeting of its Joint Overview and Scrutiny Committee on Wednesday.

Expected income from the likes of car parking, markets and arts centres has been slashed almost in half due to the virus, from £6.7m to £3.6m.

South Kesteven District Council
South Kesteven District Council

This, alongside other identified ‘cost pressures’, means SKDC is looking at a shortfall of around £4.1m for the year. The budget for this financial year was previously set at £20.19m

Emergency grants from the Government will boost the council’s coffers by around £1.8m, with potentially more to come, but authority chiefs still predict a deficit of around £1m.

Further “expenditure reductions” will help tackle this shortfall but it is possible that the £2.8m ‘budget stabilisation reserve’ will still have to be raided.

The loss of income from car parking alone is expected to cost the council £926,000 with a further £928,000 lost due to closed arts centres.

Richard Wyles, interim director of finance at the council, said that using the reserve would be the “last resort”.

He added: “We have a series of interventions that need to be introduced to mitigate our anticipated £1m deficit.”

Coun Adam Stokes, cabinet member for finance and resource at SKDC
Coun Adam Stokes, cabinet member for finance and resource at SKDC

Committee chairman Coun Graham Jeal (Con) congratulated the council’s finance team on adapting to the pressures of the pandemic.

However, Coun Philip Knowles (Ind) expressed concern that one of the only capital programmes to lose out would be the planned renovation of Bourne Corn Exchange whose allocation had dropped from £168,000 to £98,000.

In his report to the committee explaining the need for the budget amendments, Coun Adam Stokes (Con), cabinet member for finance and resources, said the budget agreed in March was “built on allocating resources to drive forward the council’s ambitions focussing on supporting the economy, competitiveness and providing quality services to its residents”.

But he added: “Within a few weeks of the budget being approved, the country was facing the worst health crisis in a lifetime and the council, like every organisation, has been impacted upon.

“Given the volatility that has been experienced since the commencement of the financial year, it is inevitable that the budget framework is no longer reflective or accurate of the current operational issues and demands.”

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