Highland Council bosses yesterday held out a ray of hope for its financial prospects after the economic hit of lockdown.
The council currently has a £22m deficit gap in its books, after bringing in a balanced budget in February.
But an approach by finance minister Kate Forbes to the Treasury to try to unlock funds for all 32 of Scotland’s local authorities gave Highland Council leader Margaret Davidson cause for optimism.
She said: “If the minister achieves what she wants it will be a game-changer for us.
“The Scottish Government has two major proposals in there, one of which is converting some of their major capital underspend from the six months when construction sites weren’t moving into revenue for local authorities.
“They are also looking at support for the sort of things we’ve been asking for for a long time about loan interest holidays so that we can spread our capital spend over a longer time.
“There are technicalities that they need to get through with the UK government, but if we can get the money they’re trying to disperse to us, it would be a game-changer.
“It would mean we don’t have to look at service cuts, it would mean we could leave our reserves alone.”
She said if loan repayments were deferred it would allow the council to borrow and get going on economy-boosting projects.
“It would be the biggest driver for recovery on capital projects and infrastructure that it could possibly be.”
But the council’s finance boss Liz Denovan sounded a note of caution.
She said the latest information was that the council is unlikely to receive anything like the £12m it was expecting separately from the UK Government’s income recompense scheme.
She said “Kate Forbes is seeking powers for local authorities to borrow, but without additional funding coming forward from the UK Government it is now extremely unlikely that we will receive any further grant funding to meet the gap.
“However the Scottish Government’s approach to the UK Treasury is very helpful.
“If successful it could provide the council with further resource and greater certainty on which to base decisions.”
Ms Denovan said the acceleration of the pandemic meant that conditions have now changed “taking us back in the journey of lockdown.
“Any change in this situation means that is even more unlikely that the budget gap presented is the likely outcome for this financial year, with a larger deficit expected.”
A Scottish Government spokesperson said: “Councils have played a crucial role in supporting local communities throughout the pandemic. To date, the Scottish Government has committed £379 million of additional funding to local government for COVID-19 measures, on top of the local government finance settlement of £11.4 billion from this year’s budget.
“We have welcomed additional COVID-related funding received from UK Government to help councils meet their extra costs but this is not enough.
“Together with COSLA, we are calling for a package of financial flexibilities for councils to help get them through this crisis.
“These flexibilities will be vital to protect local services and ensure our councils remain financially sustainable.”