Isle of Wight Council may have to make £5.5m of cuts in next year

There’s a £1m overspend in the Isle of Wight council’s current budget and that may mean having to make £5.5m of cuts next year says the deputy leader, Cllr Stuart Hutchinson

money and calculator

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.

He said:

“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.

He said:

“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

Image: Images Money under CC BY 2.0

Any views or opinions presented in the comments below must comply with the Commenting 'House Rules' and are solely those of the author and do not represent those of OnTheWight.

Leave your Reply

22 Comments on "Isle of Wight Council may have to make £5.5m of cuts in next year"

newest oldest most voted
peterj
How curious that they mention the loss of income at the Crematorium, but fail to mention the huge ongoing losses of the floating bridge which have been much larger over the last few years (about a £1 million lost since 2016). As for the Roads PFI… The genius who spent almost 2 years coming up with “let’s cut the gritting routes” was paid £17,250 for a month’s… Read more »
davimel

I am so pleased that ‘Austerity’ is now over…Can you imagine having to make huge cuts every year since 2008? I am just so pleased that our council are so fiscally aware and that our money is always safe!!!! And yes, I am being sarcastic! I wonder who will be blamed this time…. It certainly wont be the Council.

Eagle eye
Just waiting for the council to give the councillors and staff a pay rise before announcing a huge increase in council tax. This council and it’s officers are the creators of the mess we are in. We need an inquiry and an audit of the council’s expenditure over the past five years. This is the only way to show how residents view’s are being ignored by the… Read more »
mikeg
This council doesn’t represent Isle of Wight residents, but the Westminster government, whose willing lapdog it is. Its operating method is when told by Cameron/May/Johnson’s incompetents to cut – slash with abandon. The closure of mental health facilities is a disgrace for which councillors should face legal sanctions. And how come none of the councillors responsible for the floating bridge fiasco have failed to cough up £30K… Read more »
blues26

They only represent themselves, vote them out

Colin
The IWC has previously used the magic word “smoothing” in past years to describe a sort of fiddle around of various monies. Part of the Asda millions went into the fiddle fund at one stage; how come with all the previous “smoothing” the IWC still appears to be having to cut more services whilst increasing council tax to the maximum allowed each year? Did the smoothing con… Read more »
blues26

All of us need to stick together and not pay it

Alternative Perspective

I’m sure Metcalf said ‘you’ve got to spend money to save money’ , but then again he was talking about senior IWC Executive salaries.

blues26

Spot on take take take another useless individual getting money for old rope

Benny C
Dave Stewart seems to find money to throw at more Undercliff Drive surveys because he wants to open up the riled at a cost of millions to prop up a few businesses owned by people he says he knows. Maybe we could reduce the size of the Council members by , say 2. That would save loads of expenses and remuneration, not to mention the hidden costs… Read more »
Geoff Brodie

So was there no questioning of this by Scrutiny Committee members? I find that hard to believe, but nothing is reported here……….

richardshanklinite
Why not charge a higher rate for all the road closures and temp traffic light works when half the time nothing is done other than the clip board men looking at the ones that do the work. Charge them a days rate and anything extra multiples by a compound of 2 times daily rate. We would possibly find they were keen on getting the work done in… Read more »
railwayphil

There are 2 well known sayings: You deserve who you vote for. Be careful what you wish for. The budget out-turn seems to be within 1% which is pretty good on the face of it. But the root cause of the year on year cuts needs to be examined and understood. Eminating from Westminster perhaps? Refer to the two sayings!

Mark L Francis

So its Spend! Spend! Spend! for election time with Boris! Yay!
(fake news)
Where’s Cap’n Bob’s New Deal for the Island then?

Tim

Tax the ferry companies more heavily. They’re the reason why so much costs more to do and run on the island. They make mega-profits out of us islanders, its time that they paid their fair share!

chartman

Not sensible…. tax them more and they will cover the cost by increasing fares!

blues26

Very true get them to put more money in the coffers instead of exploiting us. Their not even any good, always running late, got mechanical problems same old excuses which are completely fabricated.

chrissy2712
This is all down to the Tory government who want to shrink the states involvement in public services. Imagine another 5 years of them. et out and vote on December 12th and make sure it’s for the only party who realistically can form a government. Just one more thin =g though. I thought the Council had around 12 million in reserve or am I mistaken? Was I… Read more »
blues26

I keep saying it get rid of them and vote them out

davimel
As I understand it (even though I REALLY don’t understand the reasoning) the council want a reserve of £20 million but seem to keep losing monies that would get them to the magical 20mil.. What in gods name they did with the Asda monies (and other ‘incomes’ from allowing planning) is beyond me. BUT IF they have an existing contingency fund of (apparently) about £11 million then… Read more »
Geoff Brodie
The £11m Reserves fund is their war chest for the Council elections in May 2021. They only really need £5m in Reserves so that leaves £6m to buy votes again. The £17m Asda money was used on things like repairs to County Hall, new IT systems and tarting up the leisure centres. Opposition councillors like me had wanted it spent on capital schemes to save on social… Read more »
davimel
So they could have used the contingency fund to cover the costs of social care but instead are saving it up for yet another wild scheme to impress voters to keep them in power??? Voters would be more impressed with improved facilities instead of cuts, and god forbid yet another Boat, road altering fiasco, or perhaps just a year off from covering their losses and mad schemes… Read more »