THE 'Covid factor' has made the Isle of Wight Council's budget the most difficult one of recent years, council leader Dave Stewart said today.

Households will face a 4.99 per cent increase in council tax, if the proposed budget is approved on February 24.

The budget is on target with £4.5 million of savings and is the required 'lawful and balanced' — but has been created without the 'Island Deal' the council has been long chasing government for.

The council tax increase includes three per cent which is going towards adult social care across the Island.

Other areas to benefit will be coastal defences, schools, Branstone Farm development, disabled facilities, highways, IT infrastructure and the ability to make compulsory purchase orders.

Band C properties will face an extra charge of around £1.35 per week.

Cllr Stewart said: "We have done everything we can to pursue an 'Island Deal' — we have made the case, we have repeated our case."

The Fair Funding Review has been delayed so the council didn't rely on an Island premium in setting the budget, but is forecasting an extra £3 million from government in future years due to our Island status.

Finance officer Chris Ward said government had recognised it, but the council 'doesn't know the quantum of it' — however he said there is a 'reasonable confidence' about getting some future funding.

However, a £55 million capital investment package for special projects sits alongside the council’s £390 million gross revenue budget to run all vital council services during the year ahead, as well as a new £14.2 million Covid contingency fund to deal with the financial legacy and the risks the coronavirus crisis has left the council with over the next three years.

There will be cutbacks including partially reduced opening hours at Dinosaur Isle Museum and Newport Roman Villa, closure of Lord Louis Library in Newport for one day a week, and closure of the mobile library service.

Read more about cuts in services here

Increases in some fees and charges include for cemeteries and the crematorium and for overnight parking from £1 to £2 from October. 

Cllr Stewart said: “Islanders have shown unbelievable humanity, community spirit and resilience during this pandemic — and we are determined to be at the heart of delivering a recovery which our residents are owed and deserve. We intend to invest for our collective futures as we look to the year ahead and beyond.

"What none of us knew 12 months ago was just how the coronavirus pandemic would impact on all our lives or the extent to which the council’s financial position would be put to the test.

"One year on, the virus has significantly impacted all of our lives and dominated everything we have done. We have found ourselves having to deal with perhaps the most challenging circumstances that local authorities have had to face and in which to try to set a lawful and balanced budget for the coming year.

"Today, however, we are able to present a lawful and balanced budget and a budget strategy for the next three years which underpins our ambition to keep the Island safe and to be able to rebuild our Island economy.

Councillor Stewart said: “These have been extraordinary and challenging times for us all, and very sadly for some there has been great loss. Throughout this period, and during many weeks of restrictions, the council and its dedicated staff have endeavoured to deliver the key services that Islanders need and rightly expect, together with the vital government support for residents and businesses — and we will be unrelenting in our efforts to continue this.

"Through good financial management and sound leadership, we are able to present a council budget which achieves the following key objectives:

£3.5 million of savings.

A council tax increase of 4.99 per cent of which three per cent will be ring fenced to adult social care to ensure we support the severe demands being placed on this critical statutory service, and 1.99 per cent to meet all our other service demands including inflation.

Additional and vital funding support for adult social care and children’s services totalling £6 million.

A reduction in future years' deficit to £9 million — to be spread over three years — after which our council expenditure will match our council income removing the need for future savings after 2024/25 — a financial milestone in itself.

Substantial new capital investment in the Island of over £55 million achieved through spending council capital to leverage additional government support for coastal defences (£40.7 million), schools (£6.4 million), Branstone Farm project (£2.9 million), Disabled Facilities Grant (£1.9 million), highways improvements (£1.3 million), IT infrastructure (£1.2 million) and Compulsory Purchase Orders (£750,000).

"Our actions in rebuilding the council's reserves by more than £6 million over the last three years, for use in extreme times, has also proved essential to the budget for next year now being proposed. Extreme times are now upon us and we must respond accordingly.

"To help us cope, we will need to rely on some £3 million of reserves leaving us with a balance of only £8.2 million at the end of 2023/24, only £1.2 million above the minimum level of reserves we are required to hold.

"The careful and prudent withdrawal of reserves to smooth out the financial shocks of the pandemic and give us time to rebuild the council's finances again is essential."

The pandemic and financial situation means there are some significant areas of savings required, such as the level of support offered through the Local Council Tax Support scheme, but a vital hardship fund will continue for those in most need and more funding is due from the government to manage the expected increases in applications to the scheme.

There will also be increases in some areas of fees and charges to try to generate more income to help deliver key services for residents as the Island rebuilds.

Cllr Stewart said: “We are determined to play a major role in helping to kick-start our economy through this package, which also invests in core services and facilities for Islanders.

“But there have also been some hard decisions to make to achieve a balanced and responsible budget, with savings of £3.5 million required for the year ahead."

The cutbacks include:

Changes to the Local Council Tax Support Scheme, including reducing the level of support from 70 per cent to 65 per cent (consulted upon during summer 2020, and approved by Full Council in January).

Increases in some fees and charges, including for cemeteries and the crematorium and for overnight parking (£1 to £2 from October 2021).

Partially reduced opening hours at Dinosaur Isle Museum, Sandown and Newport Roman Villa.

Closure of Lord Louis Library, Newport for one day a week, and closure of the declining mobile library service by helping users to switch to the home library and online services.

The revenue savings also include new income generation in areas such as waste management through a better trade waste offer, and income from new beach huts.

UPDATE, February 25: Find out what happened at the budget meeting here.