Agenda item

The Executive Director of Finance and Corporate Resources presented a report in respect of the financial implications of the Covid-19 pandemic for the Council. 

Members were advised that Covid-19 had had a particular impact on income to the Council from services.  There had been more limited cost implications for the Council, though there had had to be investment in Personal Protective Equipment (PPE) and new IT equipment for staff.

The Council was required to provide an update to the Government every month in respect of the financial position of the authority.  This had started in April 2020 and data had continued to be collected throughout the lockdown.  The loss of income over time had been taken into account, though circumstances kept changing which meant that it was difficult to provide accurate forecasts about future positions based on this data.  The economy nationally had not responded as anticipated since elements of the lockdown had been lifted and this had contributed to further uncertainty.  Locally, this, combined with the lockdown, had resulted in a reduction in income from business rates.

Officers were anticipating that the Council would not receive the level of income that had been expected from Rubicon Leisure Ltd when the Medium Term Financial Plan (MTFP) had been set for the 2020/21 financial year.  The Council was anticipating a potential loss of £850,000 income from the company, though the position might change within the next few months.  The Council owned the company, so the authority had responsibility for any of the organisation’s liabilities.  The financial costs of delivering Leisure Services was proving problematic for many district Councils, including those authorities which had outsourced services to private sector organisations. 

The Shareholders Committee had met on 3^rd August 2020 to discuss the financial position of Rubicon Leisure Ltd.  There had been some good news, including that 84 per cent of the membership of the Abbey Stadium had been retained during the lockdown, income from golf services had tripled during the period and there had been an increase in income from the stadium.  Social distancing measures had been put in place at all of the leisure facilities managed by the company.

There had been a decrease in the amount of Council Tax that had been paid during the lockdown.  Some residents had deferred payments until later in the year so the real impact in lost income from Council Tax would not become apparent until later in the financial year.  The Council only received approximately 12 per cent of the Council Tax funds; the fall in revenue from Council Tax would have a greater impact on Worcestershire County Council’s financial position as that authority was the main recipient of Council Tax.

At the start of the lockdown there had been concerns about the position of the Housing Revenue Account (HRA).  However, a dedicated team had been working in respect of rent arrears and the position of the budget was improving.

To date the Council had received just over £1 million from the Government in response to the financial impact of Covid-19.   Further funding was being made available nationally by the government for the arts.  Unfortunately, Forge Mill Needle Museum would not be eligible to apply for funding, though the Palace Theatre would be eligible.  Additional funding for Leisure and Cultural Services was expected from the Government moving forward.

The external auditors had been kept informed about the financial impact of Covid-19 on the Council.  Officers had clearly communicated the Council’s expectation that the impact of Covid-19 would not be taken into account by the auditors when assessing whether the Section 24 Notice should remain in place for the authority. 

Following the presentation of the report Members discussed the impact of Covid-19 on the Council’s finances.  Reference was made to the different figures that had been included in the report in respect of planning and Officers noted that the Council would not necessarily lose all of the income quoted as being at risk for this department.  Members also questioned the basis for the figures that had been quoted in respect of potential financial losses for taxi licensing and Lifeline services and Officers explained that these were based on estimates.

During consideration of this matter Members paid tribute to the hard work of the Financial Services team, particularly the Executive Director of Finance and Corporate Resources and the Head of Financial and Customer Services.  Members noted that the team’s response to the Covid-19 pandemic had occurred at a time when officers were already working hard to address the issues that had been raised by the external auditors in the Section 24 Notice.  Members also praised all staff for their hard work during the lockdown and for ensuring that frontline services had continued to be delivered.  The hard work of staff employed by Rubicon Leisure Ltd was also praised and Members noted that the company had encountered unprecedented circumstances in the first 18 months of operation.

Reference was made to the financial challenges facing the Council, in respect of the Section 24 Notice as well as the impact of Covid-19.  As a consequence, it was noted that Members would need to review the Council Plan and it was possible that difficult decisions would need to be taken in order to ensure that the Council had a balanced budget moving forward.

RESOLVED that

the projected budgetary impact of the Coronavirus Pandemic outlined in this report and related actions, both taken so far and planned for the future, be noted.