A drop in income is forcing Lichfield District Council to pull nearly £1m out of its reserves.
In the latest review of financial performance the local authority identified that it had previously expected to be caught short by £581,000, but that because revenue had been lower than expected it needed to find another £391,000.
Citing commercial rents, planning fees, car parks and the Garrick Theatre as causes for the reduced income, the report – which was put to Cabinet last week – identified a reduction of £1.3m in revenue and apportioned £600,000 of that on low interest rates. It blamed the double-dip recession, funding cuts imposed by the Government in Westminster and ongoing volatility in the banking sector for the background to the substantial impact on council finances.
While the reduction in income is a concern, the council also highlighted the ongoing impact of their “budget reduction programme” which aims to make almost £13m in savings by April 2014. The plan is set to have saved £10.7m since 2008 by April this year.
Commenting on the report, Cllr Christopher Spruce, assistant cabinet member for finance, revenues and benefits, insisted it was “an income problem, not a spend problem” and highlighted the need for the council to protect it’s sources of funding.
Compounding the problem for Lichfield District Council was a second report to Cabinet that identified a need to borrow extra because of the increasingly delayed Friarsgate scheme. The scheme was expected to be provided a reimbursement to the council of £2.3m which is needed for a contribution of £1.3m towards the ongoing Friary Outer development – a commitment which will now require borrowing to fulfill.