Burnley Council on 'red alert' over £2.7 million budget gap

Howard Hamilton-Smith warned of the crisis in report to Burnley Council’s ruling executive on Tuesday night.

His political boss Coun. Maggie Lishman told fellow senior councillors “This is not peanuts we are talking.”

The report told them: “Due to the coronavirus pandemic, this year is unprecedented with the focus on the forecast reductions in income and increases in expenditure, resulting in a

potential significant year end net budget deficit.

“The forecast year end net budget deficit stands at £2.7m.

“This is after taking into consideration £1.271m of direct central government funding received to date.

“The budget deficit equates to 17% of the council’s overall net budget.

“The budget is being continually monitored.

“Currently any shortfall in funding will have to be met from reserves, however further significant government intervention will be required as the current level of reserves is not sufficient to fund the estimated deficit.”

A second risk management document puts the council on ‘red alert' in three areas.

They are – financial stability; inability to deliver the council’s regeneration programme; and risks in responding to demographic changes and increased deprivation.

All three are categorised as ‘High Priority Risks’.

The report says triggers include further funding cuts, income loss, insufficient financial controls, expensive decision making, external cost pressures, and price or interest rate increases.

It warns that possible consequences include loss of organisational sustainability, reduced service delivery, reduced customer satisfaction, reduced reserves, damaged credit rating and damage to reputation.

Council resources boss Coun. Lishman said: “We are looking at options. The necessity for an emergency budget still remains with us. We are still in very unpredictable times.

“There has been criticism of us for putting three areas on red alert but I believe in being honest about the current position of the council..

“Financial stability was in all of the items this evening. And I think it would be wrong not to put an honest risk register in front of the executive.”

Environment boss Coun. Cosima Towneley said: “I believe in the resilience of the people of Burnley and I think and we would do better to rely on their jolly good sense in noting that we are working for the best in the community.”