Minutes:
The Corporate Director of
Finance, Governance and Property introduced the report and began by
stating that COVID-19 had both direct and indirect financial
implications for the Council. He commented that the direct affect
was on the Council’s expenditure on COVID-19 related issues,
and the indirect implications stemmed from loss of income, such as
through fees and charges. He stated that Thurrock were working
closely with central government, but COVID-19 would have financial
implications that affected next year’s budget. He added that
the report made numerous assumptions, but due to the pandemic,
officers could not predict what was going to happen in the future.
He stated that officers were currently working on a 4 month
position, and were looking towards the gradual easing of lockdown
and government restrictions.
The Corporate Director of Finance, Governance and Property went on
to say that COVID-19 would have an approximate financial impact of
£9.7million on the Council, although £9.2million of
this should be funded by central government. He highlighted that
the longer the pandemic continued, the bigger the financial impact
would be. He clarified that £6million had been added to the
resilience reserves, in addition to the general fund budget and the
current financial position could be maintained in the short-term.
He mentioned that the government had set-out £9.2million for
Thurrock in financial assistance, although other money was being
received from central government in support, such as through
hardship grants, and money towards care home cleanliness. He added
that government had also deferred payment of business rates, but
these would have to be paid at some point in the future.
The Corporate Director of Finance, Governance and Property stated
that Thurrock had received £12.3million from central
government in grant support to small businesses and those in
sectors such as leisure and hospitality, and the first tranche of
those payments had been made last week. He added that central
government had also given Thurrock £1.237millon for a second,
discretionary scheme. He clarified that this year 2401 businesses
would not be paying any business rates, and currently 1600
businesses had received grants.
The Corporate Director of Finance, Governance and Property stated
that there were currently pressures in Adult Social Care as care
homes had lost income due to people not moving in because of
COVID-19 fears, and they had had to increase expenditure on areas
such as PPE for staff. He added that Council expenditure had also
increased to set up Thurrock Coronavirus Community Action (TCCA) to
ensure that those residents who were shielding or vulnerable
received the necessary support. He commented that the Council were
now renting High House Production Park as a base for TCCA
operations, and were helping to support nearly 10,000 residents in
a number of ways, for example delivery of food parcels or emotional
support. The Corporate Director of Finance, Governance and Property
added that financial pressures had also arisen in Children’s
Services and Environment, due to a fall in the number of placements
and closure of household waste and recycling centres
respectively.
The Corporate Director of Finance, Governance and Property moved
onto discuss point 3.2.2 of the report and highlighted that the
Council were not currently saving any more money than pre-COVID19
as contracts still had to be fulfilled, such as home to school
transport, to ensure that businesses survived and could be utilised
after lockdown finished. He clarified that the loss of revenue from
council tax this year, would only start to affect the
Council’s budget next year due to accounting procedures. He
mentioned that as Thurrock’s current income from council tax
was approximately £70million, and even a 1% rate of
non-payment could affect the budget.
The Corporate Director of Finance, Governance and Property added
that the Housing Revenue Account was beginning to see arrears, as
some residents were now struggling to make rent payments. He added
that some elements of the capital programme had also been delayed
due to contractors stopping work because of social distancing. He
stated that officers were currently considering what aspects of the
capital programme were deemed to be urgent, and what could be
deferred, although these discussions were still in a very early
phase. The Corporate Director Finance and Governance summarised and
stated that these figures were estimations, as the situation was
very fast-moving and relied on central government’s policy
towards lockdown and social distancing.
The Chair thanked officers for the early report, and felt it was
good for the Committee to see early estimations of potential
pressures. He felt that the report presented a sobering view of the
current outlook, and the financial impact the pandemic could have
on the Council for years to come. The Chair asked what government
support would be provided to meet the gap in Council COVID-19
expenditure, and if Thurrock had made a request at central
government level for more funding. The Corporate Director Finance
Governance and Property responded that Thurrock reported to the
Ministry of Housing, Communities and Local Governments (MHCLG) on a
monthly basis, which outlined the financial pressures faced. He
added that some pressures would only become prevalent next
financial year, as some pressures would be temporary, and some
would be permanent.
The Chair then queried whether COVID-19 had affected any Council
investments, and the Corporate Director Finance, Governance and
Property replied that the Council had seen no impact on investments
at the moment. He added that a detailed report would be going to
Standards and Audit Committee in July, but that as the renewable
energy sector was not adversely affected by the pandemic, the
Council investments had not been affected. He clarified that other
Council’s had had issues with their investments, and needed
MHCLG support, but this was because they had invested in commercial
property, which had seen a downturn during the lockdown. The Chair
highlighted 2.6 of the report, and asked what was considered
non-essential spending, as this had been frozen during the
pandemic. The Corporate Director Finance, Governance and Property
replied that some non-essential recruitment had been frozen for
posts that did not directly support COVID-19, but that this had
been decided at directorate level.
The Chair highlighted point 3.24 of the report and queried what
proportion of Thurrock Regeneration Limited (TRL) over-spend had
been COVID-19 related, and which projects had been behind before
lockdown began. The Corporate Director of Finance, Governance and
Property responded that TRL had overspent by £1.3million last
year, but this had risen to £2.4million because of
COVID-19.
Councillor Duffin thanked the Corporate Director of Finance,
Governance and Property, and the finance team, for the report and
felt it was good to see reserves had been increased. He asked if
the Council Spending Review was still taking place during lockdown,
and what the surplus on investments would be. The Corporate
Director of Finance, Governance and Property responded that no new
investments were currently being advanced due to COVID-19, but the
Investment Strategy remained in place and Members would be involved
once investments began again. He added that the surplus on
investments would be approximately £33.35million.
Councillor Hague felt it was good to see small business grants
being given to those that needed it, and queried how these had been
marketed to local companies, to ensure that every company was aware
of the support that could be accessed. The Corporate Director of
Finance, Governance and Property explained that the grants fell
into three categories, the first being for the hospitality sector,
of which all grants had been sent to those companies that had been
interested. He stated that the second category was for rural
relief, and these grants had also largely been paid out. He
explained that the third category was a discretionary small
business rate grant. He stated that the team were currently trying
to engage with these businesses through a variety of mediums, but
was proving to be difficult in some cases due to businesses being
closed for lockdown. The Corporate Director of Finance, Governance
and Property explained that the government had provided a grant of
£1.237million to set up the discretionary scheme, but no
clear government guidance had been provided on distribution. He
added that the Council were currently trying to establish how many
businesses fit into this category before money could be
distributed. He stated that this was being done in two tranches,
with the first tranche due to end this week and approximately
£1million being allocated to businesses on a pro rata basis.
He stated that the first tranche had been running for two weeks and
had helped to establish the number of businesses that would need to
access the grant. He clarified that the second tranche was for
those businesses who had not applied in the first round, and any
money left over would be allocated to businesses from both
tranches.
Councillor Ralph queried how the reserves had been increased during
COVID-19, and the Corporate Director of Finance, Governance and
Property replied that some of the reserve increases had come from
investments and other services. He added that some Members of
Cabinet had also given up their Members allocation to go into the
reserve fund. Councillor Rice queried the
overspend of the A13, and asked if this would affect the
budget in this financial year or the 2021/22 financial year. He
also asked how businesses were being identified for the
discretionary grant, particularly businesses who were not on the
business register but paying service charges to larger companies.
The Corporate Director of Finance, Governance and Property answered
that any overspend from the A13 project would affect the budget
when it was completed. He added that the Council continued to seek
grant funding from sources such as South East Local Enterprise
Partnership (SELEP), but if these could not be found, then the
finance team would look to funding the project through capital
receipts or prudential borrowing, both of which would occur in
2022/23. He also replied that hundreds of businesses had applied
for the discretionary grant in the first weekend it was opened, but
the Council were working hard to identify more businesses that were
not on the business register.
The Chair highlighted point 3.10 and 3.11 and asked for a breakdown
of costs for the TCCA. The Corporate Director of Finance,
Governance and Property replied that he did not have a detailed
breakdown, but the majority of costs were on the rental of High
House Production Park, the essential food and goods being provided
to vulnerable and shielding residents, and the cost of setting up
the call centre. The Director of HR, OD and Transformation added
that the TCCA dashboard provided weekly expenditures for TCCA, and
outlined the services this money provided, such as 500 food boxes
delivered, and 3,500 interactions with residents.
The Deputy Leader
added that this was a sobering and unprecedented time for Thurrock,
as well as the wider UK, and a collaborative approach was needed to
ensure the best outcomes for residents. He stated that
conversations between all Members, and officers, needed to happen
on a regular basis, but it should be recognised that some service
reform might be needed and urged for sensitivity to be showed in
upcoming conversations. He stated that financial outcomes were
currently only projecting for a few months’ rather than years
due to COVID-19, but felt it was good to hear the Committee’s
discussion, and looked forward to hearing the debate at Standards
and Audit Committee, and that members should be factual and
accurate with statements made and recognise the commercial nature
of the subject. The Chair welcomed the Deputy Leader’s
comments and agreed that it was good to receive regular updates
regarding the Council’s financial position. He also agreed
with the Deputy Leader that the financial position and
budget-setting process should be regularly reviewed, with feedback
from the Corporate Director of Finance, Governance and Property
included.
RESOLVED: That:
1. The Committee noted the assumptions and financial implications
set out in the report.
Supporting documents: