Aberdeenshire Council considers financial impact of Coronavirus

Aberdeenshire councillors were warned today to expect and prepare for significant changes to the Council’s financial plans, given the impact of responding to Coronavirus (Covid-19).

The full Aberdeenshire Council met remotely today (Thu, Apr 30) to consider business items, with an agenda dominated by Covid-19 related activity.

Head of Finance Alan Wood presented a report advising that a full review of the council’s medium-term financial strategy (MTFS) should be undertaken as a result of the unprecedented circumstances, reporting back to full council in June. The MTFS covers all the elements of the council’s budget including revenue, capital, reserves, housing revenue account and carbon.

Aberdeenshire Council set its budget on March 18. Since then, public services have been widely affected by the pandemic with many facilities closing and services transforming to respond to the crisis.

The change to services is expected to have an impact on Council Tax collection rates, school meal and car park income, and the review will set out the full implications of this in more detail. There is also likely to be an impact on the council’s ability to make all the savings put forward in the budget.

Three options were set out in the report to support the review of the financial strategy, including accelerating financial performance reporting, providing monthly updates based on actual income and expenditure, and segmenting the financial year into quarters. Scenario planning will also be developed, which will consider a number of potential outcomes based on how services will be impacted in the coming months, based on Government guidance.

Mr Wood also set out the significant changes to the council’s budget over recent weeks, including impact of a non-domestic rates holiday for a year, receipt of £46.7 million in business grant support – of which over £26 million has been distributed to Aberdeenshire businesses in the last 3 weeks, a share of £350 million to support the council’s response, and the re-profiling of income from the Scottish Government to frontload budgets to support the immediate response.

Council Leader Cllr Jim Gifford said: “It seems a long time ago that we set our budget, even though it was only six weeks and it now bears little resemblance to the current situation. Recovery will depend on many factors – what we have to spend and what any new settlement looks like. What’s clear is that our current budget is no longer going to reflect our requirements, so I welcome the review.”

Cllr Peter Argyle added: “We all recognise the many pressures on our budget which has been completely taken over by events. I would like to acknowledge the tremendous achievement of our teams who have made payments of £26 million to 2,300 businesses in three weeks – it’s so important to local business and is essential part of responding in supporting our economy in these difficult days.”

Cllr Gwyneth Petrie supported the recommendations, recognising the need of finding a practical way to get through the situation and helping councillors to fully understand the impact going forwards.

Councillors unanimously supported the recommendations. The recording of the meeting will be available on the council website from Friday, May 1.