An overspend of £1 million pounds is forecast by the Isle of Wight Council — causing delays to next year’s budget.
Speaking at the council’s corporate scrutiny committee on Tuesday, finance cabinet member Cllr Stuart Hutchinson said he hoped the 2020/21 budget would be finalised in January.
That would leave only a short amount of time before February’s budget-setting meeting.
Cllr Hutchison said the delay was due to several monetary pressures — including a predicted £1m overspend on this year’s £150m budget.
More spent on social care than planned
Income from the Isle of Wight Crematorium is forecast to be £145,000 less than planned, and the council has spent £2 million more on social care packages than it had budgeted for.
PFI cuts ‘not realised to time’
The council had hoped to cut £1 million from the Highways PFI project by March 2020, but the budget report presented to the committee revealed savings have ‘not been realised exactly to time.’
A shortfall of £482,000 is forecast — which the council hopes to remedy by March 2021.
Total deficit to £1m
Against those overspends, and failures to save as much as hoped, the council has made treasury management savings of £2 million — bringing the total deficit to £1m.
Hutchinson: “Close to the wire”
Cllr Hutchinson said the pressures had meant the council was unable to draw up its budget as early as in previous years.
“Each year savings become more difficult — in the time I have been in charge, we have had to save £20.5 million.
“What is different this year, as opposed to the last two, is at this stage we were looking at savings which were on or above target.
“For the very first time, and this really is an indicator now as to how close to the wire this budget is getting, we are reporting, with five months, to go that we have a predicted overspend of £1 million.
“I know cabinet members and officers are working very hard to try and recover as much of that as we can.”
Possible £5.5 million cuts in 2020/21
Cllr Hutchinson said the council was reluctant to cut further services.
However, if the money was not recovered, he said the council would have to cut its budget by £5.5 million 2020/21, as opposed to £4.5 million.
“We will do our damnedest to get to the level we need because we don’t want to find the extra money.”
The money could be taken from reserves. The council is required to hold £7 million in reserves, in case of financial emergency.
IWC: Using reserves to reduce savings is not financially responsible
A council spokesperson said after the meeting:
“The council’s estimated reserves at the end of the year were budgeted to be £12.2m.
“However, a £1m overspend would bring this down to £11.2m and, in reality, there is only a buffer of £4.2m.
“The council uses its reserves to facilitate the smoothing out of necessary savings, if it is not sufficient to meet its spending needs.
“Without available reserves, the council could find there are ‘spikes’ in savings required in particular years which could be de-stabilising for services.
“Using reserves to reduce savings is not financially responsible — it simply delays the time by which savings must be made.
“If they are not made in one year, they have to be added to the savings required in future years — it simply stores up larger savings for later.”
This article is from the BBC’s LDRS (Local Democracy Reporter Service) scheme, which OnTheWight is taking part in. Some alterations and additions may be been made by OnTheWight. Ed