COVID-19 And Its "Significant" Impact On Isle Of Wight Council Finances

The 'COVID factor' has had a "significant" impact on the Isle of Wight Council's finances, but the local authority believes it is on track to present a 'balanced budget' for the forthcoming year.

A near 5% council tax rise and an increase in parking charges were among the plans put forward yesterday (Wednesday), as County Hall looks to save £3.5 million in the year ahead.

However, the council is confident it won't have to dip into its pot of money set aside for next year to make up for lost funds as a result of coronavirus.

It has also announced plans to introduce a COVID Support Fund to reduce the future impact of the pandemic.

So how has it got to a 'balanced budget'?

When coronavirus struck many of the Isle of Wight Council's services - including leisure centres and car parking - were affected.

These factors contributed to the council being left £19 million out of pocket.

This figure has been gradually reduced however, according to the man in charge of the council's finances. Cllr Stuart Hutchinson said:

"We have had separate funding from Government - one grant of £4 million and one of £5 million, which got the figure down to £10 million several months ago.

"We have been working really hard by tightening expenditure by some deferments to diminish that blackhole and we had actually managed to shrink it to about £5.5 million."

A Deficit Reduction Strategy was implemented, resulting in the pausing of renovation projects among other things.

This has created £11.5 million - £1.2 million of which will go towards covering the COVID-shaped blackhole.

Cllr Hutchinson added:

"We can project that if the savings continue to bare fruit we are likely to get to a balanced point by the end of the financial year.

"Councils are not allowed to run overdrafts so if we had still got part of that blackhole outstanding at the end of this financial year we would have had to find that by changing the forthcoming budget to make additional cuts but I am really proud to say that by a huge amount of hard work we are now projecting will be in balance by the end of this financial year.

"In fact it looks like we might have a very very slight saving of that target of possibly just over a million pounds."

The council says the remaining £10.3 million will be used to help support its budgets for the next three years.

A further £3.9 million has also been provided by the Government for next year, giving the council a £14.2 million COVID Support Fund.

A "challenging time"

Speaking at a media briefing yesterday, council leader Cllr Dave Stewart said the forthcoming budget is the "most complex" he has ever worked on.

He said  "extreme times" have forced the council to dip into its reserves.

Councillor Stewart said:

“These have been extraordinary and challenging times for us all, and very sadly for some there has been great loss. Throughout this period, and during many weeks of restrictions, the council and its dedicated staff have endeavoured to deliver the key services that Islanders need and rightly expect, together with the vital government support for residents and businesses — and we will be unrelenting in our efforts to continue this.

"Our actions in rebuilding the council's reserves by more than £6 million over the last three years, for use in extreme times, has also proved essential to the budget for next year now being proposed. Extreme times are now upon us and we must respond accordingly.

"To help us cope, we will need to rely on some £3 million of reserves leaving us with a balance of only £8.2 million at the end of 2023/24, only £1.2 million above the minimum level of reserves we are required to hold. 

"The careful and prudent withdrawal of reserves to smooth out the financial shocks of the pandemic and give us time to rebuild the council's finances again is essential."

Proposals to save money in the forthcoming year include upping crematorium and cemetery costs as well as reducing library services.

You can read the council's budget plans for 2021/22 here.