£4.3m Covid cash shortfall leads to warning of service cuts for Conwy residents

Residents could face service cuts after Conwy county council’s finance chief revealed the authority is staring at a £4.3m deficit due to the coronavirus pandemic.

Director of finance Andrew Kirkham said the council needs “some sort of spending review” due to continuing uncertainty over what cash will be reimbursed from Welsh Government for lost income and extra spending brought on by the pandemic.

He said cutting services to departments like social services during the pandemic was “counter-intuitive” but “some form of spending review” is necessary to guard against any shortfalls in cash.

Mr Kirkham told a special meeting of the council’s finance and resources scrutiny committee the authority only has around £2.3m in reserves that haven’t been spoken for, from a total pot of £11m.

He said: “We have to start looking at our reserves and balances.

“Quite a lot of authorities haven’t got reserves and balances to the extent they’re needed – that includes us.

“We haven’t got significant capital reserves and we need some form of spending review.”

The report revealed public sector pay rises added an extra £900,000 to the financial pressure the council is facing, with no prospect of recouping that from Welsh Government.

Potential non-delivery of budget cuts agreed by council departments in March 2020 amounted to more than £1.5m and funding the council tax reduction scheme, which gives discounted bills to those on low incomes, could cost the authority an extra £1m in this financial year.

So far Welsh Government has given aid of a little under £7.4m from more than £8.6m claimed for extra expenditure and loss of income during the coronavirus crisis.

It has left the council with a guaranteed shortfall of £180,000 and a decision still to be made on a claim for £857,000 relating to lost income in quarter one.

Almost £1m of the estimated deficit in this financial year relates to “the risk” Welsh Government doesn’t cover all losses caused by the pandemic.

Welsh Government ordered all councils to offset losses by reductions in expenditure caused by the pandemic.

For Conwy county council this included savings on production costs at Venue Cymru, savings on travel and utilities and other “operational” savings.

The study also revealed the authority had claimed £893k in furlough payments for the period between April and July, when an average of 300 staff positions were mothballed due to the pandemic.

Officers have no idea how much they will be recompensed in future quarters by Cardiff, so Mr Kirkham pushed home the need to be prepared by conducting the spending review.

He added: “Every person, every business is facing extreme uncertainty and Conwy is no different at all.”

This year’s financial settlement, the second-worst in Wales, already left council departments looking for £8.3m worth of cuts across the board.

Mr Kirkham agreed to update the committee on the progress of the review later this year.

North Wales Pioneer | Llandudno