The blackhole in Stockport council’s finances has more than doubled since the beginning of the coronavirus pandemic.
Back in February the town hall was forecasting a budget gap of just over £17m over the next three years.
But the ‘scarring impact’ of Covid-19 has left that figure standing at nearly £35m due to an expected increase in the cost of providing services combined with a drop in revenue.
The council’s revised medium term financial strategy notes 'there is a recognition that the financial legacy of the pandemic will go beyond 2020/21'.
The authority is also braced for a significant drop in the amount of money it brings in from council tax and business rates, as well as various fees and charges.
Bosses have factored the loss of the dividend from Manchester Airport into forecasts, with the overall loss of commercial income over the coming two financial years totalling nearly £20m.
Prior to the pandemic the council was working on the basis of an £8.7m funding gap in 2021/22 and one of £8.2m the following year.
But deputy leader Coun Tom McGee told a cabinet meeting things had now changed considerably.
“If only that was the case,” he said.
He outlined that next year the £8.7m deficit was the ‘residue of the last 10 years of austerity’.
But added to that would be £3.4m towards repaying the £10m collection fund deficit and the loss of the airport dividend, estimated at £6.4m.
However, he added: “Don’t panic too much we are working our way through the medium-term financial programme to see what we can make savings on, we know we have some additional one off reserves
“But it is important that we see the scale [of it].”
The council is currently forecasting a £9.4m overspend on this year’s but will use earmarked reserves and the general fund to bring it back on budget.
Further in-year savings are also being sought.
Bosses do not believe they will have to issue a 114 notice - a last-resort measure which would ban all spending bar statutory services.
But the report makes clear that reserves will have to be replenished and ‘are not a permanent solution to the financial challenges faced’.
Coun McGee admitted the task ahead looked ‘daunting’ - but said he was confident the council would manage its way through it.
“I’m not suggesting this will be easy - because it won’t in any way shape or form,” he said.
“But we are working our way through and hopefully our next cabinet meeting we will be able to produce some of the current savings we’ve made in-year and the impact that might give us.
“Is it gloomy? To an extent it is gloomy but it’s not despair time because we can manage our way through this if we area careful. And being careful, as I have said before, means we avoid knee-jerk reactions.
"Because if we do knee-jerk reactions it means we have to take chunks of services out and that does nobody any favours.”
