Use of reserves to help Chichester District Council balance its budget

The impact of the pandemic means Chichester District Council will have to use more than £2m of its reserves to balance its budget in 2021/22.

Thursday, 10th December 2020, 3:37 pm
East Pallant House, Chichester District Council HQ. Pic by Steve Robards

It’s not a position the council is used to being in but, with the costs of Covid likely to drag on for a number of years, it’s one that’s not going to go away quickly.

At a meeting of the cabinet on Tuesday (December 8), members agreed that a number of key principles laid out in its five-year Financial Strategy should be approved by the full council.

High on that list was the need to return to a position where the books could be balanced without the need to rely on reserves – though it was estimated that as much as £8m would need to be used by 2025/26.

The biggest financial loss since the pandemic broke has been the income from fees and charges, such as car parking.

Between 2021 and 2026, those losses could total as much as £5.2m, though potential savings targets of £6.6m have been set for the same period.

The strategy also assumes a council tax increase of £5 per year – 3.4 per cent – though that has not yet been decided.

One spot of good financial news for the council – though it is not good news at all for council staff, teachers, firefighters, police and civil servants – was the government’s decision to impose a pay freeze on some public sector staff.

John Ward, director for corporate services, told the meeting that staff earning more than £24,000pa would not receive a pay rise, savings the council £110k each year for the next five years.

Like every council in the country, Chichester faces tough times but the coffers are by no means empty.

A report to the meeting showed that, of the £49.9m in reserves as of April, some £13.88m was still available for new projects and investment in services up to 2025.

The money taken from the reserves since April included the £8m set aside in July to counter the cost of Covid.

The cabinet recommended that at least £4m should be kept in reserves at all times.

There were strong words from Tony Dignum (Con, Chichester North) as he anticipated criticism for the financial decisions made by the council over the next few years.

Mr Dignum said: “This is the first year for a very long time that we’ve had to dip into our reserves in order to balance the books but the point is clearly made that we must get back to a balanced budget.

“We don’t want to hear people say we should freeze council tax or freeze parking charges – or any other fees and charges over which we have control – without offering compensating savings.

“Too often it’s the easy thing to say we shouldn’t have this particular increase – but no one offering that solution has any idea as to what spending they would cut to match that.

“In a time of financial stringency we have to bear these principles very much in mind.”