The “significant changes” with the ongoing Covid crisis will plunge Highland Council £11.25million into the red this financial year, councillors are being warned.
Finance chiefs claim there will be an impact on public services and possibly put on hold previously pledged capital projects.
In a report to go before a special meeting of the full council on Thursday, Liz Denovan, the executive chief officer for finance and resources, said: “Over recent days the context around Covid has changed significantly.
“The prevalence of Covid across Scotland, the UK and worldwide is increasing significantly and new restrictions on activity are coming into effect.
“It is too early to say what the economic and societal impacts of these restrictions will be but it is clear that the restrictions will impact on the demand for council services and the way in which those services are provided.
“From a funding perspective it appears as though risks identified around government funding support may be crystallising.”
She said the current year budget gap “from a potential near-balanced position” could plummet “to a deficit of around £11.254m”.
She added that the Scottish Government had put forward a number of proposals for ‘funding flexibilities’ that they may make available to help manage the financial impact of Covid, but said: “Ultimately the use of any option would require the council to borrow to support its revenue budget.
“The interest associated with that borrowing and need to repay the sums borrowed would place further constraints on the council’s revenue budget in future years.
“This report is intended to highlight the ever-increasing uncertainty facing the council in the current climate.
“Given the current funding uncertainties for both revenue and capital, now would not be the opportune moment to produce a new capital plan.
“Instead work will focus on the council’s capital strategy with a report outlining the key aspects of that strategy to be brought to council by the end of the year.
“Once a capital strategy is formally approved by the council that will allow a new capital programme to be developed in the new year that both meets the strategic investment priorities as well as aligning with overall affordability limits.”