COVID-19 Financial Update
To inform Cabinet of the potential financial impact of the Covid 19 pandemic on the 2020/21 General Fund, Capital and HRA budgets due to reduced income or increased expenditure.
1. That Members note the report and agree the proposed funding of the initial shortfall identified.
2. That members note the possible implications for the collection fund and the possible impact on next year’s General Fund position.
3. That Members note monitoring and reporting will continue as the year progresses.
The Cabinet considered a report which outlined the potential financial impact of the Covid-19 pandemic on the 2020/21 General Fund, Capital and Housing Revenue Account budgets due to reduced income or increased expenditure.
The Strategic Director (Internal Services) described the financial implications for the Council for 2020/21 arising from the loss of income from services such as parking and building control both during the lockdown period and a slowdown in income whilst public confidence built during the recovery period. The highest impact on income was anticipated to arise from the current closure of the Fairfield Leisure Centre and the likely limitations on its operations once it re-opened which was likely to mean that the Council would receive no management fee income for 2020/21. Unlike in previous years, where the budget for interest from investments had been overachieved, investment interest was likely to be much lower in 2020/21. Lost income from deferred or overdue commercial rents of £420K was also anticipated. In total the projected loss of General Fund income for 2020/21 was £2,094,500 as well as lost income in the Housing Revenue Account of c.£100K arising from rent arrears and late commercial rents. At the same time the Council had been incurring additional expenditure through providing support to contractors/suppliers (£605K), providing additional support to the homeless (£230K) and emergency food support (£40K) as well as additional cleaning costs for the Civic Centre (£65K). The reported estimated cost for the purchase of Personal Protective Equipment of £91K was likely to be much lower, around £50K, as the result of bulk purchasing. The implications for the collection fund were also described with business rate reliefs of £58.5M applied to nearly 700 businesses in the borough, alongside business rate and Council tax deferrals and missed payments. So far the Council had received £1.125M from the Government which would cover the additional costs of direct spending arising from COVID-19 but this would not cover the projected loss of income. It was therefore proposed that the budgeted contribution to General Fund reserves for 2020/21 of £6.2M should be reduced by £2M to cover the gap between the estimated costs/loss of income and the government funding.
The Cabinet Portfolio Holder for Finance congratulated the Finance team and paid tribute to the robust budgetary measures put in place by Mr Harris which had been maintained over a long period of time which meant that the Council’s finances had been in a healthy position so that the Council could do everything that it needed to deal with the current crisis. However he highlighted the big financial risks moving forward and the fact that the shape of the recovery process would have an impact on economic activity and Council income.
The Leader of the Council warned of the danger of succumbing to the concept of things getting back to normal as lockdown measures were progressively relaxed and national support schemes came to an end. It was important to remember that some people would still require help and support beyond the ending of these schemes and that as more people returned to work there might be less support available from volunteers. He made it clear that the Council would continue to use its infrastructure to continue to provide support for those who still required it. He stressed the importance of learning from the lessons of recent months and to build upon the huge amount of goodwill and community spirit that had arisen as a result, which the Council planned to recognise in due course.
1. That the Cabinet note the report and agree the proposed funding for the initial shortfall identified;
2. That Cabinet note the possible implications for the collection fund and the possible impact on next year’s General Fund position; and
3. That Members note that monitoring and reporting will continue as the year progresses.